Cyrela Brazil Realty SA Empreend e Part (CYRBY) Q4 2024 Earnings Call Highlights: Record Net ...

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Sat, Mar 22, 2025, 1:01 AM 4 min read

Launches: BRL9.6 billion, 45% year-on-year increase.
Sales: BRL9.3 billion, 44% year-on-year increase.
Net Revenue: BRL8 billion, 27% higher year-on-year.
Gross Margin: 32.4% for the full year.
Net Income: BRL1.65 billion, 75% higher year-on-year.
Return on Equity (ROE): 20.9%.
Cash Generation: BRL259 million for the year.
Dividends and Buybacks: BRL373 million returned to shareholders.
Net Debt: BRL985 million, with a net debt over equity ratio of 10.3%.
Inventory at Market Value: BRL10.6 billion.

Warning! GuruFocus has detected 5 Warning Sign with CYRBY.

Release Date: March 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Cyrela Brazil Realty SA Empreend e Part (CYRBY) achieved record-breaking net income of BRL1.6 billion, a 75% increase year-on-year.
The company reported a significant increase in launches and sales, with launches reaching BRL9.6 billion and sales at BRL9.3 billion, marking a 45% and 44% year-on-year growth, respectively.
Net revenue for the year was BRL8 billion, a 27% increase compared to the previous year.
The company maintained a strong gross margin of 32.4% for the year, consistent with previous years.
Cyrela Brazil Realty SA Empreend e Part (CYRBY) generated positive cash flow of BRL259 million and returned BRL373 million to shareholders through dividends and buybacks.

Negative Points

The macroeconomic environment remains uncertain, with potential impacts from political and economic factors that could affect future performance.
Gross margin experienced some pressure due to adjustments in receivables and product mix, with a noted impact from AVP adjustments.
The company faces challenges in workforce availability, which is a structural issue in the market.
Interest rates for legal entities and individuals have increased, potentially impacting debt costs and returns.
The macroeconomic scenario, including interest rates and economic conditions, remains a concern for future operations and land bank acquisitions.

Q & A Highlights

Q: Can you provide more details on the adjustments in receivables and the impact on gross margins? What are your expectations for gross margins in 2025? A: The gross margin was impacted by AVP and the product mix. The vintage launched in 4Q '24 had a gross margin of 31.3%, but excluding AVP, it would have been 34.5%. Historically, our gross margins have been between 32% to 34%, and we expect them to remain in this range, although some volatility is possible. - Miguel Mickelberg, CFO

Q: What is your outlook for the project pipeline in 2025 given the macroeconomic conditions? A: We are excited about our project pipeline for 2025, but the macroeconomic scenario is unpredictable. So far, the year has started well, and we haven't felt any significant macroeconomic changes. However, we remain cautious, especially regarding interest rates and the economy. - Unidentified Company Representative

Q: With a large delivery volume expected in 2025, what are your perspectives on cash generation and dividend payments? A: We anticipate cash generation between BRL300 million to BRL500 million for the year, depending on variables like sales speed and land bank. Regarding dividends, the minimum will be substantial, and additional payments will depend on cash generation, similar to our strategy in previous years. - Unidentified Company Representative

Q: How is the company addressing the challenges in the low-income segment, and what is your view on the potential changes in the Minha Casa, Minha Vida program? A: The Minha Casa, Minha Vida program is in a good phase, and we have been growing in the Vivaz segment. However, we are not aiming to become a major player in this segment. We continue to monitor the program's developments but do not plan to make significant changes based on recent news. - Unidentified Company Representative

Q: What are your thoughts on the current credit environment for legal entities, and how does it affect your strategy? A: Rates for legal entities have increased significantly, impacting debt costs. However, this will not change our strategy or project appetite due to our solid balance sheet and access to capital markets. We will continue to monitor the situation closely. - Miguel Mickelberg, CFO

Q: Can you provide insights into the performance of finished units, particularly in Rio de Janeiro and the South region? A: In Rio de Janeiro, finished units increased due to specific project deliveries, but we expect sales to normalize. The South region has faced liquidity challenges, but we are working to address these issues. Overall, we are not overly concerned about finished units. - Miguel Mickelberg, CFO

Q: How do you view the impact of rising financing rates on sales and cancellations? A: Despite increased financing rates, we have not seen a rise in cancellations or delinquency. Sales have continued at a steady pace, and while we are monitoring the situation, we have not observed significant impacts on our sales dynamics. - Miguel Mickelberg, CFO

Q: What are the drivers behind your ROE, and do you have a target for a structural ROE? A: We do not have a specific ROE target, but achieving a 20% ROE was unexpected and is a result of our efforts. We focus on operational excellence rather than setting a structural ROE target. Improvements in the low-income segment could enhance ROE, but we remain cautious. - Raphael Horn, Co-President Director

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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