Good morning everybody, welcome to our earnings release of the 1Q26, Direcional Engenharia. Welcome to our investors, market analysts that follow up on us, and all the participants of this conference.

I'm here with Ricardo Gontijo, CEO, and Paulo Sousa, CFO and Director of Investor Relations. This is goes to analysts, market analysts.

We're going to show you the main results of the quarter, and then we're going to have our questions and answers session. We would like the investors and analysts that would like to pose their questions, please use your raise your hand tools so that we can unmute you and you ask your questions.

We're also live in the YouTube, the Direcional channel. You can see it in our IR site, and you have the link to download the material we will show you.

We're recording the event so that we can have them as always in our Results Center. I would like to give the floor to Ricardo, who will give us the main highlights of the quarter.

Good morning everybody. It's a huge pleasure to be once again with you and show you the results of the 1Q26.

Thank you very much for your participation here. Let's begin with page 3 where we would like to highlight to you the main points we consider most relevant in our operations.

In our view, we had the first best Q in the company in all our metrics that we analyzed. We had a record in launches over R$1 billion, and we know that it is a quarter that is a weaker quarter because of seasonal issues in our country.

Also launches grew 12% compared to the same Q last year. Also this was the first Q that was record in terms of gross sales.

This is a huge highlight in our operations here, grew 29% compared to the first Q last year and reaching R$1.9 billion in the first Q of the year. Also it was record in terms of gross margin when we adjusted by the rates we pay in the finance to production of our projects, right?

It reached a record of 42.9% when we do this adjustment based on the financing to production. Also the net margin came as a record for the first Q reaching R$213 million, and when we analyze the recurring net profit, the recurring net profit was R$200 million in the quarter.

Also here with regards to the net profit, I'd like to stress that we delivered this result even after payment of R$804 million in dividends in December. Naturally this year we began this first quarter with a leverage level above the margin we closed in the 4Q last year, and because of this financial expenses have been higher.

This net profit level was also reached after the sale of 15% of the share in Riva, our subsidiary that works with a segment above the Direcional brand that works in. We had this net profit even after all of this that happened.

I think this is very very important to stress. Also I'd like to highlight to you here in the lower right chart, we separated the net margin and the net margin before minority interest.

When we compare the minority line in the 1Q25 to the 1Q now 26 after the sale of the stake in Riva, it's natural for this to have risen. When we exclude minority interest to do a comparative analysis between the first Q last year to the first Q this year, we can see that we delivered a level of net profit before minority interest that was record, 21.9% not considering minority interest in our results.

This shows that in spite of us being delivering a record level in terms of net margin, as well as this we have benefited from a greater operating leverage in the company allowing the expense lines, specific SG&A, having a dilution allowing us to deliver a record net margin. Our growth is a result of gain in net margin and also because of the benefit from the operating leverage where we have translated greater operations into greater dilution of expenses, we've gained efficiencies in all the lines of our statements of account.

To close here, also I'd like to highlight that we closed the quarter with an annualized ROE of 38%, which is a return that I would say is a benchmark in all business segments that we can compare to, not only real estate development, but a series of other segments, different businesses in our business, where we believe that an ROE of 38% is very important to highlight. It is a value that we've given back to our shareholders, and we've worked for several semesters even with very high costs that we have in the country, and we've been able to deliver this result.

Page 4, the main theme at the moment in the last weeks in the main interactions that we've had with investors has been the impact of the increase of the oil price in the costs of our product. Here I would like to stress to you a certain comfort we have with regards to our margins and our capacity to maintain margins in an eventual scenario of cost increases.

This is not what we've seen so far. Up so far we've seen costs under control, but because of the representativeness that oil has in the cost of the products of civil construction and materials pressed before freight before we go into this analysis and the potential impact that this rise in cost might have in our margins, I would like to show you how we are going through a moment where there was significant cost increase.

In my point of view, it should have been significantly higher than any impact coming from this issue of oil and the war in Iran, which was the COVID period, the pandemic. When we consider 20 year 2020, 2021, that was where we had the greatest crisis because of the pandemic everywhere, producers with restrictions producing these products.

We reached an INCC-M 14%, it reached almost 20%, and even in this context with a very challenging period, you see the INCC of 14% in 2021 had an increasing impact here, there was a gap in the increase and the reflect of this in our gross margin so reported in that statements of account. Even with an NCC that is extremely elevated, our gross margin in '22 compared to '21 had a dropped of 1 percentage point.

We can show you in practice how this company was able to navigate in a much more challenging environment at the moment that we consider, and an INCC of 14% had an impact of 1 percentage point in the company only. In '23 we practically completely recovered the gross margin impacted in '22, and then we went to these record gross margins we've been able to deliver in the current period.

Having been able to show you in practical terms how we have been able to navigate in very high inflation environments and extremely challenging operations during the pandemic, when we go to the scenario we have in 2026, first I'd like to stress that what we have seen in terms of cost impact of certain products because of the oil price is not even close to what we believed at the time, and also we believe to currently be much more prepared for eventual inflationary scenarios, which is still not what we have at the moment, but still we have to be prepared for this. I'd like to say that we are much more prepared than we were at the time, specifically, and now on page 5, we made a breakdown of the things that gives us comfort with regards to our capacity to operate in this scenario that can be a rise in cost.

Look at the accounts receivables we have today, adjusted and corrected by the inflation, and in '21, '22 we didn't have this. Today Direcional has more than R$2.7 billion in receivables adjusted by the inflation, and the greatest part of this receivables comes from Riva operations where part of our clients opt to finance the purchase of the equipment directly with the company, R$1.8 billion comes from this portfolio of receivables in Riva.

We have another R$900 million in our pro-soluto portfolio, Direcional. These receivables are grossly adjusted by the INCC, and this somehow has a certain correlation in spite of our vision the INCC in eventual rising costs, INCC should be above the IPCA, most of these receivables are corrected by the INCC.

During some time now we were questioned because we had part of these sales done with financing that was done directly with us because this client pays around 40% the value of the property during works, 60% after delivery of keys, and this increments our capital in our projects, and this has an impact in the return we deliver over the capital we invest in the projects because they're more capital-intensive. Still, in a moment such as this, these receivables give us comfort with regards to our hedge in case there is an eventual rise in prices.

What in a certain moment meant a slight reduction in the return the company delivers, now it is a hedge considering a more inflationary scenario. Part of our way of work, it's a result of this, and also what we've always said in Riva, we believed it was positive to have part of our sales done with this accounts receivable correction, inflation and INCC, and its return today shows that this company strategy was assertive because we have a high part of the costs here hedged with this INCC correction.

Also we have a little more than R$5 billion in inventory already launched, mostly in construction, where we always have the option of rising the price of our products, increasing it considering an expected inflation in the subsequent months after works begin. R$5 billion in inventory we have, it gives us the flexibility to adjust prices, right?

It's another lever giving us the comfort, and in case it's necessary, we can work the pricing of our products here. Net sales speed is in a better pace.

Although we've had an important increase in net sales speed in the last quarters, we have tried to work with a net sales speed of 25%. It is lower than what certain players or than what certain analysts believe would be a net sales that would allow us to maximize return of profits for the company.

This lever gives us strong comfort that we have because we have R$5 billion in stock and allows us to adjust prices in a more inflationary scenario, allows us to maintain margins. Net sales speed at moments we were criticized for having a net sales speed lower than a return, but this is what allows us to have the comfort to know that we can maintain healthy margins without huge challenges at the moment.

Costs line, we have from all our works that are ongoing, we have a deferred cost of almost R$4 billion, the total backlog construction cost, right? This is enough to hedge 62% of the backlog of construction cost in our works, and we have all this inventory that we can give a new price in this inflation scenario.

When we compare R$4.4 billion in costs with 2.7 R$2.76 accounts receivable, this means that we have only R$1.7 billion of the cost that we need to hedge in a higher inflation scenario. To hedge this R$1.7 billion, we have R$5.1 billion in inventory, ou seja, the cost that is not hedged by accounts receivable is 1/3 of what we have in terms of inventory ready for commercialization, for sale.

An eventual increase of this inventory, it doesn't even have to be even closer than what the INCC has to be, I would say that 30% of our inventory from the R$5.1 billion here is equivalent to R$1.7 billion in cost that is not covered by accounts receivable and that has INCC correction. 30% of this inventory would be enough to hedge the part of the works cost that is not covered by accounts receivable.

I would say that this is our comfort with regards to our capacity of maintaining very solid margins here in this inflationary scenario. I want to make this message very clear to the market.

We have been much contacted and demanded by all of you so that they can understand how we see this impact of the oil costs in our margins. I would say that in our point of view, we are very much prepared for this scenario.

Once again I want to stress, it is not exactly what is materializing in terms of the cost of our works, but for which we're very well prepared. Now going to slide number 7, the operating highlights, in the first Q this year we launched a little more than R$1 billion, it was a 12% growth compared to what was launched in the first Q last year.

In the last 12 months closed in March '26 when compared to the last 12 months closed in March '25, we noticed an important growth in our launches, 27%, and we reached almost R$7 billion in a launch within the last 12 months. Net sales growth was even more relevant.

We grew 19% in net sales in this first Q of '26 compared to 1Q25, 29% growth in gross sales. We had a growth in this first quarter justified from some challenges, some regional checks we had in certain states that increase a state subsidy to one that already came from the Fundo de Garantia, guarantee fund.

With this the cancellations grew in these states. A growth of 29% in gross sales compared to the first quarter to '25 was translated in 19% of gross sales quarter after quarter, R$1.6 billion in net sales, record for a first Q in this company.

When we analyzed the last 12 months closed in March, we delivered R$6.4 billion in net sales. Page 8, net sales speed, this is an important point to stress.

We had an important increment in the first Q when compared to the 4Q last year. Also the first Q is seasonally weaker, we believe that in the quarters before us, right, we will have a VSO over this level, always being very cautious with eventual costs increases because of the oil as I said before.

Also important to stress that this net sales speed in the first Q, we delivered a strong increase in the Direcional segment. In the 4Q we showed the launches of Direcional was concentrated in December, Direcional's were impacted, and now this first quarter we show you that there is no type of problem in terms of sales speed in this sales speed.

It has been recovered. It is in line with Riva, both segments operating with sales speed that are very solid.

Also 23%, 24%, right? Also because of the cost of our product and also because of our capacity to mitigate eventual cost increases in the following months, I would say that the sales speed is still our greatest priority here.

Now I would like to give the floor to Paulo, and at the end of his presentation, I'll be with you for questions and answers.

Thank you very much for the presentation, and good morning everybody. Once again, very expressive results in the 1Q26.

Beginning with the financial highlights here, I I would like to make some comments with regards to revenue. To the left here, the blue bars, in the first quarter '26 we delivered R$1.2 billion compared to third, 30% increase compared to last year.

Sales grew 19, here this is the result of sales and works. They certainly grew from the 1Q25 to '26, and this is a reality even this being a first quarter with much rain.

We noticed this in the fourth the fourth Q rained less, but it lasted until April. Even in this scenario, works went well.

Revenue dropped a bit compared to the fourth Q because of the rain, but still compared to the to previous year 30% growth, 12 month version 29%. Now we have R$4.6 billion in revenue.

We have been growing very relevantly, sales compared to works and delivering results. To the right, we have here the the SPEs we do not consolidate in the results.

We had R$1.2 billion in SPEs. This is these are non-controlled, right?

Almost all the works, we do almost all everything in the works, we manage the business. The revenue growth here was 25% in 12 months.

There was a dilution of this SPEs, and this is a scenario we should continue considering for the future. We've reached R$5.8 billion.

This shows that revenue is getting closer to sales. Ricardo showed you R$6.2 billion in net sales, we're catching up now.

This means that our works are within schedule and in fact very close to sales. Next slide, gross margin, Ricardo stressed this.

In numbers what he said, in the first quarter 43., 42.9%, 0.1 percentage point compared to the previous quarter. Since revenue dropped, the net profit dropped too.

In the year we delivered a gross margin of 42.4%, a very relevant growth compared to the 12 months that closed in '25, more than 200 in margin. This is the result that we were able to extract from this cycle that closed now in the first Q and where we were able to transfer prices a lot of lot from the margins of our products and also in a cost scenario where we went through a very important moment delivering the works with adequate costs.

To the right we have the deferred revenue, R$4 billion deferred revenue. These are units sold and not constructed yet, not built yet, very high margin, 44.4%, very solid, a slight drop compared to the past quarter.

We always say that the deferred revenue margin is the main sign that our gross margin is solid. When we look at these current levels, we are comfortable, and we know that our gross margin will continue at a high level.

This is a quarter we close with an important inventory of deferred revenue with very high margins. Next slide, now going to EBITDA margin, here we have an important growth of the EBITDA margin compared to compared to the gross margin.

We had we were able to have some dilution in terms of expenses in the last quarter. To the right, as Ricardo said, net profit in the quarter our net margin was 17.2% already adjusted, non-recurring results.

When we look at this gross margin before minority interest, and this is the great difference when we compared the minority interest, specific specifically the Riva one, allowed us to our margin to be to the side, but here it grew when we compared '24 or even '25 to now, and giving us strong returns, 38%. The fourth Q was around 44 because we had the important payment of dividends in the fourth Q.

This year we still haven't paid dividends, and this is what adjusts the equity. Here once we pay dividends, ROE grows again.

Lastly this slide, we always begin by saying that this is the beginning of everything, right? Capital structure, all everything parts from this capital structure.

We close the Q with a net debt, and also here I consider all the debt, 24%. When I look at only the corporate net debt, excluding net linked to projects, and this gives us a comfort because it's aligned to the development of the project, net debt is 2% over to equity.

Here in the middle is our cash position, really R$2.4 billion. This is the net debt.

We have a lot of cash, we worked to put cash in the company to go through this period of elections and all the rest. To the right, and even with this very large cash, we have a debt amortization schedule that is much stretched.

We have 66 months. This is the longest period in terms of debt in the sector.

We're very comfortable to be able to operate in this moment to reduce this leverage and pay dividends without much leverage discussions. Now I will give the floor back to André so we can begin with our Q&A session.

We are here to answer any questions you might have.

We will begin with our questions. Our first comes from BTG, Gustavo Fabrís.

You have the floor.

Good morning. With regards to inflation and costs, I would like to see what the company has done in terms of efforts here with regards to price.

Did you raise and also what you had in terms of inventory? Did you have to increase the granting of pro-soluto?

Could you give us some color here? This would certainly help us.

The second question, in keeping with price, would be demand. How have you seen demand increase here in this first Q?

I know that we have to feel how the changes of the program, what's going to happen, but anything here will help.

Gustavo, thank you for your question. With regards to pricing, as we said, we are very comfortable with our capacity of continuing operating with solid margins.

Even if we've been with this eventual cost increase, we're very comfortable with what we have seen. We have clearly been able to show how we operated in the pandemic.

This was a scenario which was much more in my point of view challenging than what we have today. We've been working with a repricing of certain products, anticipating and preparing ourselves, creating space for eventual cost increase of certain products.

Now in the end of April we have been trying to work with this repricing here. Also it is important to say with regards to pro-soluto, no flexibilization, much to the contrary.

We changed our credit engine for the concession of pro-soluto. We have been much more restrictive, and we are not at all going to do any kind of flexibilization, anything that might mean a loss in the quality of the client of which we are trying to sell to.

Since last year, since September, October, we've been more restrictive here, and we changed nothing in our policy, and also we have no intention of changing. Normal life, and in spite of operations here you saw sales speed in the first quarter growing compared to the fourth, and we saw something very positive in terms of demand.

April was a strong month in terms of sales. We continue seeing important demand, and the adjustments going to 3 and 4 of the program allows us to have important affordability.

No concern here, not even yellow light here, okay? With regards to the demand, no way, nor with costs.

We have important comfort here.

Perfect, thank you very much.

Thank you. Next one, Matheus Meloni, Santander.

Ask your question, Matheus.

Hello everybody. Here just to understand price increases, understand if you see an ease with regards to the price of new launches and price of inventory.

Do you have the same capacity? Also I want to understand the kind of impact this would have in the sales speed path looking in the future.

The second question, I want to understand how you see the Belo Horizonte master plan, the changes to come, the approval here, and benefits that this might bring to Direcional, and also an update on regional programs. This was mentioned last year.

If you could give us an opinion here, it certainly would help.

Matheus, I'm going to answer your first two questions. I would say that the pricing of our product, launches and inventory, it's very similar.

There is no big difference between our pricing capacity, the pricing for new launch or something that is in inventory. The main point we have here where we see huge value in accelerating the sale of inventory product with a greater production.

They're being traded with very healthy margins. We have always said to the market that we have worked with gross margins that are superior to the recurring gross margins in our business.

We would launch projects with gross margins that are inferior to the ones that we have delivered in the company, and even with ones that are inferior to the ones we are delivering, still we would have a return over the capital that is very interest, which would justify the launch. I want to say that we have deferred margin that is over 44%, we have margin of the stock inventory, things that are already constructed, very healthy.

New ones are done with lower gross margins, which makes sense here. This is why we always say to the market that parting from a certain moment our gross margins should converge to one that is lower than what we've operated in.

This does not mean that there would be a reduction in the return that the company delivers. I think it's natural, and in this moment we have prioritized the sales of inventories with a greater advance percentage because of the cash generation done here.

Launches are lower than our deferred margin because it makes sense for us in terms of capital allocation. Now if from the point of view in terms of the impact in that sales speed, we are delivering something that is above what we delivered last quarter, but it's not necessarily what we need to do.

I think in this level we've operated in, we can deliver a very healthy return and cash generation that is very healthy because the pace of growth of our revenue had a natural reduction, our revenue growing 30% year after year. It is obvious that you have greater demand for working capital, and in the second quarter when rains end, many works begin.

With this net sales speed level, we believe we will give a healthy return, cash generation too. We've had an important cash generation, operational cash generation in the first quarter, and now it's going to be gradual from here on.

We want to operate with net sales speed above what we delivered this first quarter. We are comfortable with our costs in this moment, and we are ready for eventual rise in price increases.

A higher VSO would give even more value to our shareholders, although it's not mandatory. Belo Horizonte master plan, it was approved.

It is very positive for the central region in the city. I think it's going to be very beneficial to the city as a whole.

There's going to be a strong revitalization of the area. Still we are waiting very optimistically for the approval and beginning of approvals from the architectural point of view and environmental point of view.

I think it can be an important growth vector for the company and always considering the relationship, the supply-demand ratio, right, coefficient here, and considering the sales speed reduction we had in Belo Horizonte. We're not going to build what is not sold.

We will only build what is sold and has demand. I think we're interested here.

We have a strong exposure in the country. More than 20% of our business is in Belo Horizonte, and I think this can be an important avenue for us too.

Now the third question, I will give to Paulo to answer with regards to the regional aspect.

Matheus, with regards to the regional aspect, since the end of last year we stopped selling checks in some states, Manaus and Ceará. The local government has promised the sector that checks will come back, but eventually we have been waiting to see what happens.

Today we have check in Brasília, São Paulo, Pernambuco recurringly. Manaus and Ceará, these were states that had a lot, but as Ricardo said, they impact the extracts of the first quarter because we sold with the expectation of receiving a check, and it didn't come in time.

We had a greater volume of cancellations. Now even without having these checks recurringly, we had some return, and in Manaus we did some transfers with check this year, clients that had already existed from last year.

Now we'll only operate we have check and budget, and everything is working just like in the states where checks remained like Pernambuco, São Paulo, and Brasília. I don't know if there is any specific point you'd like to know more.

No, no, it was just an update. I think your answer was very clear.

Thank you very much, Ricardo, Paulo, and André.

Thank you, Matheus. Next question, Ygor, XP.

Ygor, you have the floor.

Good morning, congratulations. Two points from our side.

Ricardo talked about the oil prices impacting freight, I want to know if you have an idea just how much freight grew, how much it represents in your costs. Also the second point, with this scenario with costs that are more pressured, does it make sense for the company to hold on to the pace of launches, or can you still grow with launches with this more pressured inflationary environment?

Ygor, we have tried to do work to see just how much freight represents our works. Of course we don't know just how much the freight will represent the product of our supplier, right?

You might have a chain impact here, right? Not only the price of what we buy from the plant and take it to the costs.

You have the cost, for example, getting said material all the way till it comes to the plant. We don't exactly know in the chain just how much freight represents.

The number we have here related to the cost of our works is around 3%. I think freight clearly has an impact, but since it represents in a more initial analysis 3% of the cost, is not where we're going to have a greater impact in our business.

For example, concrete is around 16%, 18%, 19%. If anything rises here, there will be an impact superior to freight isolatedly.

Freight is not the greatest point of attention. Still we're very well prepared for a scenario of cost increases.

I'd like to repeat here, until the moment in our provisions, our cost budget, everything is covered. We are anticipating eventual future impacts that is more significant with accounts received that was huge.

We didn't have this in COVID. Riva was less expressive.

Now we have much greater amount to receive. The scenario is much more comfortable than what we had in the past in the pandemic.

We have shown everything with much less variable than what we could work to offset cost increase. This is the message: you can be okay with costs.

Of course we're always prepared, always monitoring. Until this moment, the sales speed generates more value and should be the greatest point of attention than costs.

With regards to eventual changes and adjustments that we had projected here in our launches pipeline, no change, no adjustment. Life follows normally.

All projects to be launched being worked on, approved, all the launches happening. Until this moment, I believe that the market has demonstrated to us because it was hurt in the past, not because of Direcional, but impacts in the sector as a whole, I think we were able to navigate well here.

Perhaps here I see there's the market with a greater concern than necessary really with regards to this reality we have been going through. Far, nothing changes in terms of launches.

Thank you very much, Ricardo.

Thank you. Next question, UBS, Ana Júlia.

Hello. Thank you for this space.

We have a cost here with regards to margin, you mentioned this. Just to understand if you could tell us the level of provisions you already have in the launches of new project, and considering this first Q, how much additional provision is inserted in this margin, or do we begin seeing this additional provisioning more for the second quarter?

Second question, we want to understand what were the reasons of this margin difference between the Riva brand, 43%, Direcional close to 39%, if there was a specific reason or a mix or is this a trend that should remain from here on? Thank you.

Thank you for your question. First, with regards to provisions, our budget we have that rule of 3% to 6% inflation in provisions for inflation.

Once this budget continues, if there is savings and looking in the past, we have been able to deliver many works below the projected inflation for two reasons: INCC that worked below this 6% and another because we were able to be more efficient. This savings comes at the end of the works.

When we look at the end of the first Q, launches were budgeted with regards to the works and how they would close. We update the budget, and it is considered to check results.

The first results, all right, we already have what we expect in terms of works to finish the works, and we made no relevant change of these 6%. Looking at the long-term curve, this should be the inflation.

We always look at the spot parting from that price, right? The second question, Riva Direcional difference, well, it's related to the mix, right?

There's no structural change in both companies. It is much more of a mix than what was sold.

Direcional sold a lot in Rio de Janeiro, Riva a lot in Minas Gerais with greater margins. It has to do with a mix, not structural change.

When we separate deferred revenue, it's very balanced here, inventory margins also. It's not easy to check, but here in our numbers and the way we manage them, there's no change between both companies.

It is a continuity. It was a number I paid a lot of attention to because of this movement you manage.

It's a mix. It's seasonal effects.

I don't know if I answered your question, Ana.

Yes, you did. Thank you very much, Paulo.

Next question, Safra, Rafael Rehder.

Good morning everybody. Two points here that I would like to address.

Firstly, how you see the health of the credit of the consumer because on one side Minha Casa, Minha Vida is in the best moment of history, but has been concerning contracting levels we have observed, FGTS and then the Desenrola program of the government. I want to see how you see the potential impact in the health of the credit of the consumer.

Secondly, I want to understand how you see the increase of INCC can impact the demand of the consumer going to when you transfer this in Caixa, it is not readjusted by the INCC, but pro-soluto ends up catching things, right? His installment becomes more expensive, right?

It can impact purchases now.

The first question on credit, well, it is not now. We've seen this greater indebtedness of families.

What we've noticed in these last quarters, it's a long curve, right, but it is a lower conversion rate, but not relevant. Since the demand for the program is big, we solved this generating more leads and coexisting with this lower conversion rate.

What we've done, we've used a lot of technology to better process our client pool here and coexist with a lower conversion rate. It is marginal.

We delivered net sales speed growth, net sales in all quarters, it is not something that it concerns. Demand is big, the pool of clients is big.

Now with Minha Casa, Minha Vida also the more vulnerable families to this scenario you talked about here, there is a difference in the sector because the demand is very big. Now here what we see and what we've seen in the past because the program has gone through cap readjustments, I think level 2 is the one that is tighter, right?

Still the other two, 10% increase in levels 3 and 4, we had very recent adjustments. The cap for 3 and 4 doesn't seem to be a problem.

Perhaps a discussion from the past was level 1 because they buy at the limit, very close to the limit. Any price increase normally becomes pro-soluto.

At a first moment, right, until you have readjustment in Minha Casa, Minha Vida. Ricardo, would you like to add to this?

I think the point here, Rafael, adding to what Paulo said, an eventual higher INCC and its impact in the correction of the pro-soluto is not what inhibits the purchasing decision of the client. I think the INCC impact would come in eventual rise in prices, and because of this that a client that might have enough money to buy this might not have this in the future, and this would mean a reduction in the market where we can work with.

A client deciding not to buy because of a concern with a higher INCC leading to pro-soluto is not something that happens. The consequence would be increase in case this happens, and the client cannot buy because of what Paulo said.

For the moment, I don't see any kind of impact in this sense. We have to wait to see the inflation in case this oil price increase remains for long time.

For the moment, there's no concern with the reduction in demand.

Thank you very much, everybody.

Romer, Bradesco. Romer, you have the floor.

Good morning, Ricardo, Paulo, André. Thank you very much for your space.

Two questions here. The first, cancellations that were greater, and there was an impact in Minha Casa, Minha Vida.

Now, this happened in the second quarter, and should things remain more pressured? Also a quick update with arrears in your portfolio, this would be very useful.

First question with regards to cancellations. Yes, the main offending factor here in the last quarters last two quarters was the end, a non-delivery of checks in some state programs, Manaus and Ceará as I mentioned.

This ended up leading clients that had bought waiting for a check, there was no check, subsidies dropped, and the client was not able to continue with that purchase, and we continued to cancellations. We've done good part of the work here.

I think still there's still some work to be done. We've still been able to transfer with some checks that came from previous the past budgets, but the work is being done.

An important point is that these units, as we were able to see in the first quarter, are being canceled and sold very resold very quickly. These are units with a lot of liquidity, specifically Manaus, because in spite of check in Manaus having ended at the turn of the year, in the end of the year, the Manaus subsidy for Minha Casa, Minha Vida increased, there was an increase of subsidies for the family there, demand there was very long.

All cancellations that happened, we were able to resell in the in the month or the subsequent month. In case there's anything else, certainly I believe that we will be able to very quickly recover sales.

We're going to have greater gross margin, greater cancellation without impacting the net sale with gain in margins. These units, we were able to increase the price a little bit also in this period, this chance this window between the first sale and the second.

In my point of view, I think we're very quickly going to solve this problem this point. This does not impact results if you have greater you end up with net sales that are very similar.

The second question about delinquency, we don't see any scenario change in our receivables, much to the contrary. In keeping with what Ricardo said, we changed our credit policy last year.

We implemented new credit work ranking the and rating the clients, delving into our credit score issue. In the midterm, we will be able to see this we will we'll see a scenario where the portfolio improves, pro-soluto, for example, with some provisioning in the long term.

I'm very optimistic with this new scenario, credit scenario we're working with.

Clear, Paulo. Ricardo, André, thank you very much.

Thank you for your question, Romer. Piero Trotta, Citi.

Good morning, Ricardo, Paulo, André. Thank you for the call.

Two questions. The first one refers to works savings.

I want to understand if in the first quarter there was a relevant level recognized coming from works economies, and in the next quarters, for example, do you have a great amount to receive in the next quarters? Is my first question.

Also with regards to cash generation, in your point of view, what are the main levers to improve this cash conversion in these next quarters? Is it related to working capital, a reduction of receivables, greater transfers?

What do you see that can help to improve this conversion of profit in cash, and what you expect for '26?

Piero, first I'll try to answer your first question. We had been telling the market that works where we had done eventual provision because of the NCC in case the expectation did not materialize of all cost increase was inferior to what we had estimated in the year, when works gets to the end, we know things are going to happen, and we revert the budget.

What I can say in the first Q, the net effect between budgets that were higher because of costs of certain products and works that began to get to the end where we referred the budget, the result was an increase, but mitigated by eventual economies that we had works at the end. There was not a higher margin impact.

We provisioned and increased budget at a higher production than what we did to reduce budgets. We have works that are more advanced, and we believe there will be savings, and this would be an eventual mitigating factor of potential increment of costs.

Also with regards to accounts receivable corrected by the INCC and what we have in inventory, when we consider all these points, we have comfort that we will not have impact in the margins, eventual cost increases that might materialize in the future. The net effect was because of budget in the first quarter.

Paulo, I'll give you the second question.

Thank you, Piero, for your question. With regards to cash burn or cash generation, among the alternatives you gave me to choose, transfer, I would consider that one.

Sales speed to accelerate it, we had a 4Q with a slower net sales speed, but now in this first Q we've been able to recover the level we were in. Because of the works and the VSO aspirations that we have, we want to work strongly in sale with quality and a transfer speed that improves every day in order to have this cash in-house as fast as possible.

I don't think we have to change anything the way we work in. Today a little bit of the portfolio that we have, our direct hedge, right, when we finance the client, this credit is corrected by inflation, we were able to address this, right?

In my point of view, it's accelerate sales and transfer to have the cash back in-house. Parting from there, have an operational cash burn independent of what we do here, right, focus on the operating factor.

When we consider the quarterly curves since '24, certainly there is a certain seasonality, there are better or worse quarters, but we have more operational cash generation.

Thank you, very clear. Thank you, good day.

Next, Jorel Guilloty, Goldman Sachs. Jorel, can you hear us?

Oi, escuta? Yes, now we're hearing you.

Okay.

Two questions. I want to go back to net sales speed, 24%.

Do you consider this a healthy level within this scenario of cost increase in construction? Because in 2020, 2021 when went well through the inflation wave, the sales speed was 8%, 10% 10 percentage points less than now.

I want to know if 24 is the right number. Second, do you believe that in this inflation rise scenario if this can impact this even more, specifically the smaller players so that they can decide not to build or if you can gain more market share?

Here if you would increase launches in this scenario, right, vis-a-vis this scenario?

Jorel, thank you for your question. Regarding sales speed, in '21 the VSO is lower than what we had today, but at the time capital was much cheaper than the capital cost today.

Considering capital cost today and the very relevant hedge we have with regards to eventual cost increase because this is not what we see, there's nothing very significant until the moment in practice, right, in our daily work. Considering that we're going to have a significant increase before us, I think that this hedge that we have because of accounts receivable today covering more than 60% of the cost during works, I think we should operate with a sales speed above of what we had in the past.

All of this is much healthier, right, compared to the past. Once again, operating above 24 would be even better.

I think the ideal level would be 2%, 3% above the 24, although 24 is a very healthy level in our point of view. The context we are entering in this scenario, which is potentially more inflationary, but with the receivables and the inventory that we had where we can adjust price with strong flexibility gives us comfort to know that we can operate above this with no problem whatsoever.

The anticipation of our cash flow, the acceleration of our cash generation today generates much more value, and we're very comfortable with the margin level we have here in the company. Also we have a reported gross margin adjusted per interest rate, 6 percentage points above, as well as accounts receivable and the inventory where we can be flexible to work on prices.

Here a higher net sales in this current context is ideal. Yes, this impacts competition.

I think competition, companies that have a weaker capital structure, they need to work with a percentage of constructions that have been sold much greater, their revenue is much more blocked in nominal terms, more than us. I think cost increase certainly would have a strong impact in the reduction of the competition, a company that is more leveraged or a capital structure that is weaker to enter this inflationary moment.

This is a scenario we've also experienced in the past, and it might repeat again, right? I think, yes, this is a possibility.

In case there is reduction in the supply because with higher demand, we certainly can cover this demand offering more products, incrementing our number of launches. This is not the base scenario, and please do not begin putting in your numbers and increasing costs, although we can absorb this demand.

Also because this inflation, right, might hurt companies that have a weaker capital structure. Everything you said certainly does make a lot of sense.

Very clear, thank you very much.

Thank you, Jorel, for your question. Juliana Veiga, Itaú BBA.

Good morning everybody. Two questions here.

Firstly, I want to talk about cash flow, cash generation, and an increase of inventory to this, right? Also I'd like to understand the efforts of the company for the sale of inventory.

You have a sales team to be able to cover this increase of sales speed of inventory specifically. Also my second question has more to do with the update of project in partnerships that you're doing in the Northeast, sales performance, and what you see in terms of launch pipeline.

Also because the company have been very vocal with regards to the level 3 focus in the region as in fact this is where you have been able to operate better, or do you believe that you can remain with the plans that you had before for this partnership?

Juliana, as I said with regards to the sale of inventory, we try to prioritize with a larger advance of works because this is where we have greater cash generation. We've had a very positive performance in Rio de Janeiro during the beginning of this year.

There our inventory with a greater advance percentage and their margins is even lower than the inventories in the other regions, I would say that we have a better performance with margins below. Still what we've done is strong effort here, training, recruiting sales team, and important also with our sales online, right, our digital channel.

We've done a lot here, a lot is happening here, and we've had results here in our real operations where we saw greater opportunity in sales speed gain. At this moment, I believe that it has made sense to make this effort.

With regards to the partnership with Moura, we have the first launch now. I think it's still early to talk about the sales speed.

We are very optimistic of operations in levels 3 and 4 in the Northeast. Perspective is good.

We already have 1 and 2 levels operating in the city. Now we're working with 3 and 4, and I think it's very positive to see this perspective when we join both brands to work this kind of product.

We still don't have complete results here, but we are very optimistic with this work being done with them.

Perfect, thank you very much.

Thank you, Juliana. Next question, Marcelo Motta, JPMorgan.

Good morning everybody. If you could tell us about the partnership, the corporate transfers, resources to maximize a return, there we see R$27 million, R$28 million, but you say that R$30 million is net, perhaps you are having some expenses related to transaction here.

I want to understand if this is it.

Motta, thank you for your question. This is exactly what we've done in other operations.

This is a project where we have capital volume, and when it comes to close to approval and launch, we bring somebody that has a lower capital cost interested in investing. This buyer enters with capital almost reimbursing us, right, in the business.

It's like what we did in the past. This kind of operation has dropped.

We've seen this happen less, but we had one more small one in this quarter. Nothing very different with regards to the others.

Perfect,

thank you, Paulo.

Next, Victor Tápia, Bank of America. A

first point here with regards to launches perspective, I think Ricardo made very clear the potential, you're not thinking of reducing things here. I just want to understand better what we can expect in terms of increase considering a controlled cost scenario, strong demand with the revision of the program, master plan.

What in fact has to happen for you to feel comfortable in reviewing the launch of volumes and increase it, and what we can expect in terms of additional launch volumes, first point. Second, going back to that slide of receivables, I just want to see if I understood when you say that you have at market value inventory of R$5.2 billion and incurring cost of R$2.2 billion, we understand that this inventory is slightly greater than the gross margin.

Am I right here? I tried to make a calculation, I just want to see.

Once again, I think at this moment far from being in a scenario where we can already anticipate eventual increases, we don't know exactly how costs will be and the supply from other companies operating in the sector. I think that our priority is cash generation.

We want to build what is sold. If we see a sales speed rising in a relevant way, we have the conditions of being able to meet eventual demand.

With new projects, we have a lot of projects being approved, and we are at a pace where we could do launches. We're very comfortable with execution and our engineering in order to build these projects very efficiently with we are at a much better than we were 1 and 1/2 year ago where we had a strong ramp-up in worksites.

We have to observe demand and performance of our clients and always monitoring supply. We have the conditions of launching more, but I think it's very early to consider this and get to any kind of conclusions with regards to this.

I think we have to wait to see. With regards to receivables and margin, there is a small detail that Paulo will explain to you, but the margin of this inventory is very similar to what we have reported, and Paulo will show you the difference,

Tápia. Thank you for your question.

Here we have in the inventory cost only we've already had a percentage of completion, right? We have to consider this to incur.

When we compare this to the inventory, and if you want, we can help you with these calculations. Here we have more than R$2 billion to incur.

This is in our inventory, in the assets of the company, and margins are very similar of our inventory and our deferred revenue. This is what.

Yes, it was clear. Just a quick follow-up here.

Can you somehow quantify from what I understood, it's going to be sales speed? There is a level in the sales speed where you would be more comfortable.

We want to try to understand when this could happen.

I think, Tápia, we should work with a sales speed of around 25%. 24%, I think, is very solid, but I think we can work with 25% because we're comfortable with costs.

This would allow us to deliver an even greater return. A sales speed at a level where we could increase launches would be 27%, 28%, and there we would begin increasing launches to give you a number here.

We're still working. It's a little early to say anything here, but this would be the number that would encourage us to increase launches.

Very clear. Thank you very much, everybody.

We close here our questions and answers session. Now I will give the final word to Ricardo for his remarks.

Firstly, once again, I want to thank you for your participation, for your questions. I think in this call certainly we were able to clarify the main themes that have been reasons for in questions, the contact we've had with the market.

Also I want to say that we are in this second quarter beginning a large amount of works, many works, right? We still see increase in revenue.

Our works are under control, we've seen strong demand for our product, we continue here without any reasons for concern, and we hope to continuing delivering results that are very consistent in the following quarters. Thank you very much, have a very good morning everybody, very good day.