Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Even Construtora E Incorporadora SA (BSP:EVEN3, Financial) reported a significant growth in net sales, amounting to BRL1 billion, with a 47% increase in inventory sales compared to the previous year.
- The company achieved a gross profit of BRL459 million, marking a 62% increase from the same period last year, with an adjusted gross margin of 30.7%.
- Even's Sao Paulo operation delivered BRL164 million in net income, a 21% increase compared to the first nine months of 2023, with an annualized ROE of 11.7%.
- The company generated BRL212 million in cash and paid out BRL230 million in dividends in 2024, demonstrating strong cash flow and shareholder returns.
- Even launched a high-end project in partnership with RFM, indicating confidence in future projects and strategic positioning in the middle-income and high-end segments.
Negative Points
- The sale of Melnick shares at market price, below its equity value, negatively impacted profit by BRL106 million, resulting in a consolidated loss of BRL110 million.
- There were delays in project launches due to interruptions in municipal approvals, affecting the timing of market entries.
- The company faces competition in the high-end segment, particularly with the Faena project, which may require strategic adjustments.
- Material and labor costs are rising, putting pressure on margins, although the company is monitoring these closely.
- There is a concern about the impact of higher interest rates on the market, although Even's high-end focus provides some protection.
Q & A Highlights
Q: Can you provide insights on the sales strategy for the Faena project and its impact on future quarters? Also, how did the accounting effect from the last quarter influence the gross margin?
A: We had a successful launch at Faena, selling 20% of the first tower. It's a high-end project with a lengthy construction period, and negotiations are complex due to branding contracts. In the fourth quarter, we sold over BRL80 million in units. Regarding gross margin, there were seasonal effects, with a 9 percentage point adjustment this quarter. Normalized, our margin is around 30%, aligning with our projections.
Q: How does the competition affect the Faena project, and what is the outlook for deliveries and cash generation?
A: Faena faces competition, but our project includes a hotel, offering a unique advantage. We plan to start construction in May next year. Regarding deliveries, we have BRL2.5 billion in PSV for the next 12 months, with 70% already sold. We expect strong cash generation due to high client acceptance and quick sales post-delivery.
Q: What is the impact of Caixa Economica's transfer delays, and what are your launch projections for next year?
A: We haven't experienced significant impacts from Caixa Economica's transfer delays. Our high-end clients are less affected by interest rate changes. For next year, we plan to launch BRL2 billion worth of projects, with approvals in advanced stages. We expect resilience in the high-end segment.
Q: Can you discuss the timing and participation in RFM partnership projects, and how is the land bank reconstitution progressing?
A: We launched the Tietê project this quarter and plan to launch an BRL800 million project in Alameda Franca next quarter. Even's participation averages 50%. Our land bank is robust, with approvals normalizing post-zoning law changes. We focus on larger projects, which may introduce some seasonality.
Q: How are material and labor costs affecting margins, and what are your expectations for cash generation and dividends in 2025?
A: Material costs are rising due to exchange rates and energy prices, but labor costs have stabilized. We monitor these closely. We expect BRL200 million in cash generation next year, with dividends around 50% of net income, subject to market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
