Good morning, everybody. Welcome to our earnings presentation of the second Q 2026.

We here from Direcional Engenharia would like to welcome our investors, market analysts, and also all the other participants in this earnings presentation. I'm here with Ricardo Gontijo, CEO, and Paulo Sousa, CFO and Investor Relations Director.

We have our initial considerations and the main highlights of the quarter, and then afterwards we will open for questions. If you want to ask your questions, please use the raise your hand feature in Zoom.

As soon as your question is answered, you mute yourself. We are recording this event so that we can put it in our results center.

Now I would like to give the word to Ricardo for his main highlights.

Good morning, everybody. Once again, thank you very much for everybody's participation here in our earnings result conference presentation with regards to second Q 2026.

I want to begin with page 3, where we're going to have some highlights I find very important to stress with you. In this first third part page 3, in the last years and also the last 12 months closed in June now, an increasing volume of launches and gross sales and net sales.

In the last 12 months closed in June, we reached more than 7 billion in launches, more 7 7 billion [200?] , we reached more than 7.5 billion, and net sales, when we consider the cancellations, over almost 7 billion 400 million reais.

I would like to stress that we still see a strong demand for our products, and it is clear in the amount of gross sales we had. However, on the other hand, it is important to stress that in the last 3 months, we had more cancellations than usual in our company.

This is because of the problem with some budgets that state governments had to increment subsidies coming from FGTS in the Minha Casa, Minha Vida program. These subsidies added to FGTS ended, we had an important volume of sales done considering the continuity of state programs that unfortunately don't exist anymore.

For these sales, now we're having to cancel the units. I would say that in the first quarter this year, the amount of cancellations, no doubt, has been much greater than the amount of cancellations in the future, but certainly we have been impacted by these state programs that were stopped.

When considering the future, most probably the difference between net sales and gross sales will decrease, and we will have a lower impact in our revenues because of these cancellations. In the following semesters, all the units that can be canceled will have been canceled.

Thus, we will have a less negative impact in our results from thereon. Page 4, still with regards to our highlights that I would like to stress with you, in the chart to the left, we try to show the effective net margin of our operation.

Of course, this is not the results for Direcional specifically, but it shows our vision with regards to the efficiency of the company's operation, specifically after the sale of a minority interest we had in Riva in the end of 2024. The minority interest line of the company grew, we consolidate Riva's revenue as a whole, and the share of these partners is in the minority line, as well as other projects where we have partners and we consolidated the revenue.

Then the minority interest shows the share they have in the profit of the project. This reduces the net margin of the revenue because we consolidate, and then we have the profit only considering our stake.

When we exclude the effect of this minority line and the equity income line, and we consolidate 100% of the revenue of all projects we have a stake, and also consolidate 100% of the profit, we notice that in the last 12 months closed in June, we reached the greatest level of net margin. What I want to say here is that we have been able to benefit ourselves operating with greater scale, greater volume, and this has reflected in the greater gross margin level in the company.

On the other hand, because of this greater skill, we have also benefited from having operational leverage, where we have been able to reduce SG&A expenses, which is very clear in the material we're going to show you now, when Paulo Sousa shows you. This has been important for us to deliver a solid net margin.

In our view, this ends up being an entrance barrier for eventual other players, the level of efficiency we've been able to work with and capacity of negotiations with suppliers because of the scale we've worked in this moment. When we consider the charts, the ones in the middle and the right, considering cash generation, we notice we've had an important cash generation this first half of the year.

After paying in December last year more than 800 million reais, naturally, we should spend the rest of the year with a deleveraging program. At the end of the second quarter this year, our level has fallen below 25%, has gone back to the recurrent leverage margins in the last years, 13%, 15%, 20%, we are already within the levels we work with.

Also, in the following page, page 5, we try to demonstrate to you in an even more stratified way, month by month, an important part of the cash that we have. This means how much we receive because of the advance of our works here in the model we work with with most of our projects.

When we address cash generation, which is the priority of the company this month and has been in the last quarters, where capital is expensive in our country, the prioritization of cash generation is for us the lever where we're going to extract the best value for our shareholders. When we notice a cash generation in the first half and second the first and second quarter, the operational cash generation, and we assess and show month by month how much has been paid within the associative model, this data does not consider what we receive from sales, direct sale, in pro-soluto, this is only what is paid for us by Caixa Econômica Federal because of the advance of works.

We see that June had been the best month in the year, where for the first time we exceeded 300 million reais. In July, we had 30% growth related to June, reaching almost 400 million reais in receivables.

There is a prioritization of cash generation. This has been one of the variables that the market has tried to understand and analyze, and we're here showing you very clearly that there is a strong continuity perspective of cash generation, seeing that June was fantastic here.

We are showing to you the expectation of continuity of deleveraging of the company with a potential returning non-used capital to our shareholders in the future. This is what we have been doing in the last years, considering the fact that last year we had a yield when we analyze dividends in high double digits, right, yield.

We still continue here in this path, and we have tried to prioritize cash generation and consequent return of capital, unnecessary capital in our operations, to our shareholders. Always being very conservative in leverage, right, because we believe it's very important and it's prudent to do this because of so many indefinitions in the national scenario and global scenario.

The resilience of our business is very clear with what we're delivering this quarter in terms of margin, volume, where we are one of the few companies that delivered sales growth in the second quarter compared to the first quarter, growth of recurrent profit because we had this effect of 13 billion coming from the sale of SPA stakes, and so when we exclude this, the profit of the second quarter was more than the first quarter. We consider being very consistent one semester after the other, and our work is very clear, you can see the results.

Page 7, in the second quarter, we had launches over 2 billion reais, more than 100% growth when compared to the third Q of the and when we analyze the first half of this year compared to the first half of last year, we had a 9% growth of launches, having exceeded 3 billion reais in launches. When we consider the demand and the projects to be approved, I would say that the demand being solid and noticing, in spite of a very strong impact in the end of June and also beginning of July, we already notice an increase in sales volume in the end of July and beginning of August.

Since the first quarter is seasonally weaker in our sector, the demand being solid, we're having projects to be approved, which will lead us to have a strong level of pace of launches. What is going to guide our launches are sales, the VSO index, net sales speed, is what's going to leverage this in the second half.

Net sales, the chart to the right, we exceeded 3 billion 800 million reais in the first Q this year, a growth of 8% relative to last year, in keeping with our amount of launches. Here, in terms of sales and launches, I'd like to highlight that we have noticed a return to the normality of the demand of our products in the second fortnight of July towards.

We had an impact because of the World Cup and some other local holidays in Northeast, in Manaus, Amazonas, we had Parintins in the end of June, we noticed an impact in the sales in June, which could be coming back to normal now. Page 8, with regards to our VSO, it was 23% in the second half this year, in keeping with what we had in the first Q, a net sales speed of 24%.

I'd like to stress, until mid-June, our VSO was superior to 25%, but because of the impacts I just mentioned now in the end of June, we ended up have a sales volume in the second quarter second second 2 weeks of quarter lower than what we were selling in April and May. The impact in the end of June lowered our sales and resulted in a net sales speed in keeping with the first Q, but there was an expectation of exceeding 25% VSO, but it was not possible because of the events we had in the second quarter.

Page 9, an important information we'd like to share with you, I said in the beginning of my presentation that we are seasonally having a higher cancellations than we believe is the recurrent volume of cancellations in our business compared to it, right. Each state we worked in, we tried to see how much we resold of those units canceled in the first quarter.

Manaus is where we had the greatest amount of cancellations. We canceled more than 600 units in Manaus, and the demand for these units, these canceled units, has been strong.

In Manaus, we have sold more than 95% of everything canceled. Of course, we would like to be selling new units and seeing positive impact in our revenue, dilution of our expenses.

However, because of the scenario of cancellations, the resale of these units is very positive. It is not the best of scenarios we would like to be in, right, we wanted to sell new units, but these cancellations haven't been a problem.

Obviously, we have an impact in revenues, we have postponement of cash generation because these units, because of a lack of state programs, right, we have to new sale, new credit approval, new transfer, cash generation is delayed because of these cancellations, but it's good. Now, I'm going to give the word to Paulo for the main financial highlights, and then I will be at your disposal for questions and answers.

Thank you, Ricardo. Thank you, everybody, for your participation.

It is good to be here one more quarter. To begin here with financial results, the revenue, as Ricardo said, there was a evolution of works, projects, and we were able to have 14% of the revenue compared to the first Q the second Q 2025 and 11, and we grew 11%, and we grew 19%.

The blue bar is where the revenue where we extract most of our results, with the growing 25%. This meant, considering a greater amount of cancellations, a postponement of revenue and resale of units, canceling, reselling, if we were selling new units, we would have more revenue.

Here, we had a quarter with evolution of works. Here, the maintenance of the gross margin from 40 42.9% to 42.8%, right, the greatest level of gross margin in our story.

We are at 42.9%, almost 43%, a growth of more than 100 bps compared to the last quarter last half last year. We had a good sales performance and the sales of inventory, and I will tell you about our inventory margin, which is still very high.

Already here to the right, where we have the deferred revenue, and here, in a very summarized way, these are the units sold and not constructed yet, not built. Once the works evolve, we defer the revenue, and we have a ref margin of 23 43.9%, and the change in margin between 2025 to now, the year 2025, is related to the harvest, the products we launched in these last quarters, specifically in the second Q.

We sold a lot, were selling our launches really well, and launches also begin with lower margin levels. Once we gain in price if we get inflation, right, our margin grows, right.

The trend here is to have an inventory margin greater than the deferred revenue. It's more than 100 billion over the deferred revenue, and this has been the reason for this.

The ones in our revenue, once we raise prices, we can have margin gains. It is important to stress this is not our priority.

Our priority is sales and cash generation. Every time we see room for this, we try to have margin gain again in our products, and considering the demand, we always are able to have a few more gains, right.

Page 12, expenses. This first, we have the trade expenses, a growth of 25%, 20% compared to last year.

First, a very big volume of launches, we had double what we launched in the first Q, in this first Q the second Q. As mentioned by Ricardo, the volume of cancellations and the impact we had in sales in the end of the quarter, for example, because of our communication material, publicity, we had a lesser dilution below the expected, and because of this, our commercial expenses, our selling expenses over the revenue reached 10 10.1%.

This is national, perhaps this a quarter with more intensity than others, specifically impacted by cancellations, but we're working to recover this dilution in the selling expenses. The first half, 33% growth, 9.7% of sales, but impacted with the lower amount sold in the end of the quarter, and also because of cancellations.

General and administrative expenses, compared to the last quarter, we had a slight decrease. In the last quarter the first quarter, we had a greater amount of PLR and also the plans we have here.

Consolidated in the first quarter and the second quarter, there was a decrease. It's not natural to have reductions of SG&As in operations that are growing, but we have been able, and this level we deliver now is healthy, and we will continue with growth here.

Next slide, this is the consolidated the space we considered. In '21, the SG&A track record represented a little more than 18% of our revenue.

Now, since '24, we're going between 14%, 15%, and 16%, and reaching 15.6%. Once again, if we are able to recover sales that were left at the table in the end of last quarter, we would have had an important dilution here, maintaining the greater efficiency levels we've already seen here.

Lastly, and as a result of everything, EBITDA and net income. In the EBITDA, we see a strong consistency in the last quarters, and eventual oscillation between expenses, but a reduction of the gross margin, and this allows us to have a healthy EBITDA, a small reduction of 100 bit bits, right?

Perhaps there was a need for revenue, but the rest is balanced, and we're working to re-accomplish this in the next sales. This will come from sales, which is our main priority.

To the right, the profit. We delivered in keeping with the we did deliver 237 million in profit and a gross margin 15.8%, compared to the previous semesters because of the smaller dilution we had in the last slides.

Still, we have very healthy levels, and in our view, there is room to recover what we delivered in the previous semesters. Capital structure, we're working here, and as we've been doing recurrently, every quarter, raising the leverage to levels below 20%.

We began the year with 23%, and now we are 18%, considering the cash generation we had in this last period. We want to generate the most amount of cash to be able to when we do it below 15%, 10%, we pay dividends.

Always focused on this capital structure. All our discussions part from here, our size, our growth, where we go to, we begin with capital structure.

Also it's important to highlight this important cash volume. We have almost 2 billion and a half of cash.

This is a historical level, our debt is the longest in the sector, 65 months of average term, right. Here we have a linearity almost every year, almost a lot of cash, very little leverage, and a strong payback period.

This is one more positive point for us to continue with our operations. I think I've gone very quickly here so that we can go to the Q&A, which is the most important part of the call, and we are here at your disposal to answer questions.

Now to begin with our Q&A so that we have time for all the questions, our first question comes from XP, Ygor Altero.

Hello, everybody. Two points here.

First, we want to understand what affected sales, was it because of the World Cup? We saw some players complaining about Caixa, too.

You didn't hear my question?

I can hear.

Okay. This is the sales dynamic.

We saw problems from cash in June, greater restriction, right, from Caixa, was it because of the cup, or do you already see the situation more normalized? With regards to Minha Casa, Minha Vida agenda, is there space for more improvements this year?

What we can expect from the improvements, how this can benefit Direcional?

Yes, very clear your question. Thank you very much for your questions.

We had a specific event from Caixa that began on the 27th June and lasted to 10th July. It was a change with regards to the percentage of the income that can be compromised with the payment of the installment of the financing.

I don't know what happened there. This reduction in the income percentage because of the payment of the PMT of the launch had a significant impact in our sales.

In the end of June all the way to 10 July, but we noticed now in July a strong reduction for demand of property parting from the 15th. This adjustment of the Caixa that happened, it was very specification.

This impacted things. I would say that perhaps it was because of the World Cup, because last year we also had holidays in the Northeast, right?

What was more special this year related to last year was the cup. Parting from mid-June, we noticed a reduction in the demand for property in our site and contact with us.

Also in the end of June, we had the impact of Caixa. In practice, it happened in the end of July because it was the first 10 days of the month, but this has gone back to normal and there's no more impact here.

We noticed Caixa very cautious in the credit analysis of clients, and I believe that this is very positive. This demonstrates the bank's technical part.

It is a bank that works technically and doesn't have any kind of interferences in the credit approval part. I think this is positive when we consider the sustainability of the program, maintenance of profitable profits from the banks.

I think our population has greater indebtedness now in these last years and also with very high costs for this debt. I think it's absolutely natural what's happening.

We noticed in one or other city where traditionally there is a greater level of defaults. I don't think there is a great point of concern in this moment.

There was in the beginning of July, but I think that things are going back to normal. We see a greater amount of access to our company via sites, WhatsApp, we see a greater volume of visits in our stores, we see more appointments for visits, right?

The beginning of July and beginning of August has showed that that 1 month, 15 June to 15 July, where there was a reduction of demand, things have gone back to normal. I see Caixa being very cautious with credit analysis, because we want it to be a program that operates with profitability, but they're under control.

Everything is okay. There isn't a huge problem here.

It is natural for us. We've had more a problem last year, but it's okay.

The Minha Casa, Minha Vida improvements, we notice that the budget of the program has been used at a pace that is lower. When we consider the monthly consumption of the budget, we clearly see that there should be enough budget for the program in the end of the year, specifically levels 3 and 4, where there aren't uses of subsidies.

The consumption of the subsidy budget has been close to 1 billion a year a month, and will reach the end of the total budget we have for the year, 13 billion. When we consider the burden here, we notice that the FGTS budget and the pre-sal budget, there will be available resources for the end of the year.

There is room for eventual adjustments to increment affordability and have more families in the addressable market. Perhaps there might be adjustments because there is available budget in those levels where there is no consumption of subsidies.

We have to wait. We have to see.

All of this comes from the ministries, right, and it has to go to approval of the FGTS board. We have to see what's going to happen.

I believe there is room for affordability in certain lead levels. There is room for something to be done because of the budget volume we have for the amount, right, we haveipped this year.

Thank you.

Thank you for your question, Ygor. Next question, UBS, Tainan Costa.

Good morning, everybody. Thank you for your question.

A follow-up of this first question, considering this impact we saw in June, the changes in Caixa, vis-a-vis the scenario, if there was a change in the company's strategies, considering pro-soluto, if there a selling effort in terms of marketing to have a greater conversion of this client, have more clients in Caixa to approve? If there is a change in the strategy, and how this talks with the growth strategy of the company, for example, vis-a-vis the scenario, eventual lower sales than was foreseen, appetite for growth, changes for next year, bottlenecks for the growth of operations in '27?

Two questions.

I think what happened there, mid-June to mid-July, with things going back to normal in these last days, these last weeks, nothing changed really in our strategy. I think it is natural, we expected that we could have the impact of the World Cup and the impact of elections in our operations.

We have always been saying up talking about this in the market. There was always a possibility of there being impact because of these events.

I believe that it's specific, it's contained, the projects are being approved. An important point that I'd like to stress here, instead of because I said this in the beginning, we are going to adjust the volume of launches because of sales.

We're not going to put capital in inventory. With the capital cost in Brazil, there is no chance of us having an increase in sales of our inventory because of of our capital cost.

We want to build that product where there is a demand, where to in a city where demand is solid, we'd have sales of speed of sales, right. We wanted to have it be more than the what we delivered in the first half.

We want a VSO of 25% or a little more than 25%. We continue with this priority.

With demand, there will be a launch. We have a landbank of more than 60 million reais today, very healthy, a relevant project volume being approved, and the demand, once it goes back to the historical levels, we certainly can see to this demand, bigger demand, when we consider the projects to be approved and to be launched.

With regards to execution, there is no cost problem. We do not see a problem, a pressure of important products, right, that could impact our margin or in or increase prices.

We have tried to increase our our prices relative to the cost, but what happened in February, March because of the increase of the price of oil and the products we use in our works, the material we work, things has been in keeping with what we have shown the market. There isn't this concern, right, that the buy side had.

We are not seeing things materialize. Priority continues being VSO, inflation controlled.

From the point of view of execution, you see the pace of the evolvement of our works, 10% growth of revenue from one quarter to the other, the same amount of sales. The growth of revenue is because of the advance of the works.

We've have been able to have a very positive performance with regards to the advance of our works. June was a record of units produced by Direcional.

We continue over more more than June. This is a drought period, right, and this is where we most produce, right.

We have been able to deal with all the labor challenges, industrialization, because of industrialization, modification of the material we use in our works. From an exact execution point of view, we have performed better than we could imagine 12, 18 months ago.

Of course, there are challenges, but challenges have been overcome by our engineering team. We have conditions of producing and delivering.

Of course, this is going to develop define what we launch. What we what defines is demand, affordability, and construction pace and also competition.

We need August now, the whole of August, which will be a month without these events and it's before elections, we will see how things will behave. From an operation point of view, supply and execution, we are prepared for a reality where there is greater demand.

We have to wait, and we will work in our company based on the demand on from our clients.

Perfect, Ricardo. Very clear.

Thank you. Santander now.

Fanny, you have the floor.

Good morning, Ricardo, Paulo. Two questions.

First, if you could give us some color, how do you see the sales tendency evolving now in the second half? If you could give us more information with regards to cancellations, what were the main states where there were cancellations?

Also is there, you talked about Manaus, right, but any other place where you have a greater amount of cancellations? If part of this cancellation is associated to a policy that is more cautious from Caixa?

Also with regards to cash generation, you've said that July was a very strong month in terms of collection, we want to know what we can expect for the second half of this year. If there is part of this improvement, right, if it is coming from greatest focus in the sale of inventory, which is what we saw in the second Q happening.

I want to understand if you see more inventory sales, right, because you have a very strong POC, right? Could this eventually come with a stronger cash generation than expected by the market for the year?

Fanny, when we look at sales, you talked about the second Q, but I believe now it's the third Q. We had an impact in the beginning of June July, which was very similar to the end of June, and now we see an improvement in the last weeks, the last days of July, which increased day after day.

August has been good, in spite that it's only the 11th, we had 11 days of sales. I believe things have come back to normal.

I believe there could be a smaller impact in terms of cash adjustments when we consider the current situation. I don't believe there will be more adjustments.

We want Caixa to make money with the program. Caixa will only work in the program if delinquency can remain in levels which will allow them to have returns for the program, right?

If we notice when the main banks of the countries disclose their balance sheet. We're going to continue, we're going to have more clients, we want to offer them more clients, and I don't think we're going to have a problem here.

Caixa has a very criterious analysis showing the technical character of Caixa, although it is a bank of which shares are held by the government. I think things tend to go back to normal.

I believe that the elections will have a lower impact than World Cup, but this is just a feeling. Let's wait for the second half.

In terms of investment decisions in a company, if you consider World Cup or elections, perhaps this is not the most adequate period, right? We have to see a longer period here.

We have focused in sales of inventory. We've had a positive sales in Rio de Janeiro, where we had the greatest POC of the works, more relevant cash generation.

Even with a net sales speed lower than the first quarter, it came from the sale of inventories in Rio. Although if we had less sales, these are works we had where we have the greatest amount of interest rates in the production in our costs.

When we see these works with a greater POC, generally there is a greater amount of costs represented by interest rate. This is where we can have more financing to projects production.

These are works. If we look at the adjusted gross margin, the reported gross margin, we had a difference over the difference of the second Q, adjusted at 42.8% and reported 40%, these are 2 percentage points.

It was a little closer to 2%, 2.2%, 2.3%, we had 0.6 bps more in the adjustments because we had more interest rates from these works where there were more inventory with an elevated POC, we had a greater amount in Rio than last year. We're going to continue focusing on inventory.

When I talk about VSO and the sale of inventory with a higher POC, the consequence is cash generation. Since we're prioritizing cash generation and our aim is to shorten the duration of our cash generation, we want this cash back as soon as possible, the consequence will be in terms of VSO and cash generation and a return of this non-used cash to our shareholders via dividends or buyback.

We're going to see the best allocation for our capital. Buyback is one option.

This is it, prioritization of the return of this capital, and we try to have this where we have greatest return. I believe I answered your question.

If there's any question, please tell me.

Okay. Very clear.

Thank you.

Next question, BTG, Cambaúva.

Good morning. I want to ask about the margin, the gross margin dynamics you see in the pipeline.

You have this high gross margin, there was a adjustment because of capitalized rates this quarter, and the ref was also a little adjusted. I want to see what you see in terms of gross margin in this inventory.

If this inventory has had price increases once you have reviewed your tables, if the gross margin of the inventory is higher or lower than the average in the company? Also understand how you see new projects incorporating these new costs, if there is some kind of, if you're increasing something here because of uncertainties, because of the war, this volatility in terms of commodity prices?

How do you see the margin of new projects being launched now in the second and third quarter? Is it different than the deferred revenue margin?

First, with regards to the gross margin of the inventory, yes, we still have a gross margin of inventory which is high, above the deferred revenue. When we launch a product, the cost of the project is inflated.

In theory, the sale of those units, if you consider them, the gross margin would be the launch, the one launched when launched. What we've seen in the last years and the way we work, once the market price rises, we increase the price of our units and gain margin.

Our inventory that we have is an inventory with a margin above the deferred revenue, which are units I have already sold, right. Once I have units in my inventory, my margin grows.

I said we have more than 100 bps gross margins of revenue of inventory compared to the deferred revenue. If we sell more, we have more deepen revenue, right?

When we consider the big volume we had in the first quarter, the inventory margin is greater than the deferred revenue margin. When we launch a product, we want it to be at a lower price, a lower margin.

We have hurdles here, we don't go below what we need to pay our capital. The new launch comes with a lower margin, and as we gain in time and the price of the property rises, we gain margin in the inventory.

When I look at a quarter specifically, in the last ones, the expense of the deferred revenue margin having with the bip, we see that it was the same as last quarter. When the deferred revenue comes back, it kind of signals that the gross margin can be returned.

This is what we believe here. We always say this to the market.

I think that this is a mid-term trend. Still, I think we are a little at ease here because we might see a gross margin coming back.

Our gross margin should remain high for some more quarters. I don't know, Ricardo, if you would like to add to this.

Caba, I don't know if I was able to answer your questions.

I think these are the main points. When we look at the deferred revenue, we noticed a slight reduction in the last quarters.

We had been saying to the market that the gross margin was not exactly the gross margin we had reported, we saw a reported gross margin which should be over the recurrent gross margin. I believe that we continue with extremely solid margins above other recurrent levels.

When you see the ref, the deferred margin have a reduction, it is This has been happening in a lower pace than what we showed to the market, and will continue as we look for before us. Between the deferred revenue and the gross is small.

The gross margin should have a reduction when we look before us, right, when we look to the future because of the launch launch of launches at lower margins than we have in the inventory. We believe everything is very positive, very interesting.

I think everything we have been saying to the market is beginning to appear in the numbers in a very gradual pace. I think very slowly, we should have a slight reduction of the gross margin, but within the expected and perhaps even better than expected.

Great. Thank you very much.

Next question, Elvis, Itaú BBA.

Good morning. First, with regards to cancellations, which was very high in the second quarter, 16.6% compared to the gross sales, and explaining a little the lower VSO, right?

I want to know how much you can quantify in terms of backlogs with regards to these units where the regional checks ended up jeopardizing these projects, right? How do you see this going back to a historical average, or if the impact goes back?

Then the second one is cash generation. Where we've had greater receivables in July, you had a sprint of sales.

I want to know if the cash generation expectation for the year changes and what you are expecting in terms of leverage for the end of this year.

Thank you. I'll consider the first question, and Paulo with regards to cash generation.

Cancellations, well, the recurrent cancellation levels shouldn't be 16.6% of this quarter, where we're clearly showing. In Manaus, we had 600 units canceled, although they were resold, but this impacted the cancellation percentage.

Fortaleza is down, now we have the Federal District. We didn't have a relevant impact during this year of cancellations in the Federal District, but certainly I think you're you're seeing the situation we have there, specifically with BRB.

The program that exists in the Federal District can suffer some problem. We're we're still trying to understand what's happening there and what can happen there.

I would say that Manaus, most of it has been canceled, Fortaleza 100%, no more cancellations now, everything's normalized there. One point we have to monitor now is the Federal District in this moment.

We had important we have important operations in the Federal District with a large amount of units in level 2, we have to monitor what's going to happen there. That's a point of attention.

When we look at a longer period, the volume of cancellations should go to a level closer to 10% in the next quarters. Obviously, I cannot foresee what's going to happen in the Federal District, right, in Brasília, but I think that, in time, the amount of cancellations will converge to normal numbers.

State programs, I think we have to certainly applaud São Paulo and Pernambuco, where we can work with huge forecastability and strong confidence in state programs. The other states which created programs, we noticed there were huge management difficulties here, and I think, in fact, these were programs that didn't have the positive impact that clients and families and companies imagined they would have.

These are lessons for everybody, and we will see how this will behave. I think this that has given us confidence to work in, what gives us confidence here is São Paulo and Pernambuco.

In the other places, we're having some hiccups here, some problems, right? With regards to cash generation, Paulo.

Elvis, since we've said our cash generation is our focus. We're working hard in our business to generate more cash at each moment.

We want to increase it. This is our history, right?

We generate cash, we reduce leverage, and we pay dividends. We continue doing this, and even with the impact we had in sales in June and July, we saw July an important cash generation.

The solution of these cancellations units, the speed, the sales of inventory in Rio went in this direction. The units in Manaus and other states did not generate cash, right, because we sold and transfer was blocked.

We wanted to solve the issue of checks to transfer, and then at a certain moment, we decided to resell, there was a demand. We see 95% of what we publicized we sold to have cash, and this is the continuity for the rest of the year.

I think the idea here is to trace specific scenarios. Where in December our cash generation be.

We want to have room for payments of dividends and buybacks. We're already very deleveraged, right?

The idea is to remain deleveraged, paying dividends. This is our historic, this is what we have been doing.

Excellent, Paulo, Ricardo.

Next question, Piero, Citi.

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

Two questions. First is a follow-up of Cabaúva's questions with regards to the gross margin and the ref margin, the deferred revenue.

Because of the deferred revenue margin has dropped in the last quarters, but we've seen the gross margin very resilient and adjusted. If its effect was the effect of inventory with a gross margin that was greater because of the transfers in time, or is there another, for example, construction cost effect, something related to this, right?

What has related this backlog margin dropping, but a gross margin still very resilient? The second point, since you've said that launch parts from a lower gross margin, what would be the gross margin of a new launch adjusted, right, without the effect of the capitalized interest rates?

Piero, thank you for your question. With regards to margin, as I said, what helps with the maintenance of the gross margin at high levels is the inventory margin, which helps.

In the quarter, we did not have any need, as Ricardo said, to change the budget related or even things with regards to the war, there was nothing different to be relevant. The gross margin is normal, with elevated margins, allowing the gross margin to be in the level, in spite of the fact that the deferred revenue was dropped and it's being impacted by new launches.

The gross VSO was very good in both inventory and launches, but the net sales speed was lower than the inventory speed of sales. New projects are new sales without checks or whatever, there is a huge volume of revenue or PSV generation of launches, which reduced the deferred revenue.

A launch doesn't have too much POC, there is a lot of deferred revenue, which is going to weigh the margin a bit more down. When we look at launches, we're launching very close to 40% of the adjusted gross margin, and it's natural.

We launch close to 40%, and now our history is above what we launch. Once the inventory is sold, we sell margin so that the consolidated margin is above this.

Just to summarize what I said, the margin is being impacted by inventory, there's nothing non-recurrent that could impact the adjusted margin. New launches have margins close to 40%, impacting the ref margin.

I don't know if I answered your question.

Yes. Everything's very clear, Paulo.

Thank you, Piero.

Next question, Rafael Rehder, Safra.

Good morning, everybody. We have two points here, too.

First, I would like to touch upon the inventory sales. We want to know how much more difficult it is to sell inventory than a launch, specifically an inventory with a greater POC, which is closest to delivery.

You end up with a lot of pro-soluto here, right, once launches are high. Could you tell us a little bit about this strategy of the company, if you accept something that is higher than usual?

Secondly, the dispersion, considering the states you're operating in, how sales are, because one of the things that you were able to improve was to reduce the gap between states.

I want to understand, at a moment indebtedness in higher, if you're feeling that things are more problematic here in them. I will talk about the sale of inventory.

Rafael, the second quarter, the main inventory we sold amount, these were units from level 2, and we had more in Rio, right? What we see is the client's payment capacity to pay.

If he has capacity, he buys, otherwise he doesn't. We're very careful here, very careful once keys are given to the client, right?

We try to have the greatest amount in deposit, anticipation, right? In this moment, where we are level 2, going from level 1 to 2, subsidy helps a lot.

I don't know if I was able to answer your question.

Perfect. I just wanted to understand if you were accepting some change here in the pro-soluto change,

something important. We don't show a policy to sell more, we don't play with credit, and zero change, right?

Specifically parting from October last year, much to the contrary, we implemented a very specific policy with regards to the granting of pro-soluto, where we have noticed new harvests healthier than before. We have been more criterious and more assertive, and this is a point we're not going to change.

It's an illusion, right, to sell only to have more cash, but with zero margin because pro-soluto was high, the pro-soluto delinquency was high, doesn't make sense. We're being more criterious, we're being more careful with healthier margins.

With regards to the performance of sales per state, we haven't noticed too much differences in the performance. We've had an improvement in Rio, Rio has performed better than before.

I would say that when we consider the last 30 days, where there was certain adjustments, specific changes in Caixa, which were the points we showed you here, we have noticed Caixa more cautious in one state or other. I think it's a little early to get to any conclusion, to tell you because we might precipitate things here, and perhaps it's not a 100% assertive conclusion because of the changes we've had and frequent changes in Caixa.

We believe we can have one place or other where delinquency is greater, they're more cautious, right, but it's difficult to come to a conclusion. In principle, without significant changes between states comparing one state to the other.

Very clear. Thank you.

Thank you. Herman, Bradesco.

Good morning, Ricardo, Paulo, André. These are two points I'd like to address.

You've already talked about cancellations, and this seems to have been a specific problem in Manaus. We want to know if there is risk of other state programs presenting a similar behaviors like Manaus, right?

Then, updates on the partnership with Direcional, Moura Dubeux, and what you have in terms of PSV, and if it's more concentrated for next year or not.

I think we had an impact in Fortaleza, which has been fully solved, then in Manaus, where we have important operations, and I think the cancellations volume is lower than it was, most of it has been solved. A point of attention is the Federal District and how it's going to behave.

We see if there is going to be impact because of the challenges the government has been going through. This is something we've worked with attention, but we can't conclude anything here if there's going to be a change or a problem in the Federal District's program.

We have monitored this. I would say nothing else.

Either we don't have state programs or state programs have performed in a very positive way. São Paulo, Pernambuco, no problem, no point of attention in these two states.

We just have to monitor the Federal District, which is the point of attention now.

Very clear.

Thank you, Herman, for your question. Igor Machado, Goldman Sachs.

Good morning, Ricardo, Paulo, André. I would like to better explore selling expense, then came in a volume higher this quarter, and you talked about three main points: cancellations and the lower conversion that happened in the end of June.

I want to understand, for example, just how much these factors impacted the things here and when were we going to have a normalization here?

Sorry, Igor. As we said and you mentioned, the main points that impacted the line is the higher volume of launches, right?

We launched double the last year. This impacts expenses.

Before, it was 120 million, and now it's 129. If we are going to consider this, we had 9 million more in selling expenses.

If we look at the other two points, they're very similar. We didn't sell almost 200 million reais, which was in the impact of the last weeks in June.

If we consider 200 million reais with an average POC of 50%, we would have had 100% 100 million more in revenue, an important dilution in expense percentage line. Cancellation, we don't lose all the money we've spent, we lose the fixed expenses, the marketing we've sold in the first sale, for the second it's a fraction, it's not the same thing because marketing is concentrated in launch, and the sale of inventory is less.

Part of the commission we lose because we've paid the sales team, some members of the chain, which we pay independent of the sale. Revenue of this cancellation was not so revenue relevant.

Sales being less than planned, we begin a month wanting to sell a certain volume and we invest to have a return, perhaps there was a greater impact here because of this. It is not easy to quantify this completely.

Thank you, Paulo.

Thank you, Igor, for your question. Next, Pedro Perone.

Good morning. Thank you for your space.

We would like to talk about capital allocations together with cash generations. If we observe in our calculations compared to yours, we see Direcional generating 70 million cash this year and the company reports 150 million.

When we consider the generation reported 230 for the year, how can we match this generation with your peg? Because 200 is equivalent to 250 million in cash, considering leverage, how much is this good to support the buyback and deleverage the company, which are the priorities of the company?

Cash generation together with buyback and deleveraging.

Pedro, our idea here is to generate cash, our mindset here, right, deleverage and return capital to the shareholders. We never leave remaining or idle capital in the company.

If you look at our background, our history, we have never done this. We began the year of a 23% of leverage, which is net debt over net equity, and we have come to 18%, and we want to generate the greatest amount of cash, deleverage the company to return capital via buyback or dividends.

I won't try to make what things would be, right. You need a model to indicate this.

Depends of sales, transfer. We had a good July, we are optimistic with these following months, specifically cash generation.

When we specifically look at the program, it doesn't close December this year, it begins now. We can operate and do this buyback in the next months.

Just like we take decisions with this dividend, we would take the decisions on execute in the program. Once we generate cash, we will see what makes more sense, buyback or pay dividends.

We have to see cash generation, and then we're not going to leverage the company over the levels we have here as comfortable levels, which is above 20%. These are the two points.

Then a difference in our cash generation calculations, and I'm going to risk perhaps it will be the change of Caixa's criteria in '24 and during '25 in some states, Caixa would pay us a transfer at the moment of the signature of the contract, and this cash remained restricted, it was blocked. This was a change, it began changing from states.

It stopped paying during signature, but during the registration of the contract. We have a greater amount of receivables, but not restricted cash.

This transition, we consider we are adjusting our cash generation because we don't have restricted Caixa. At the end, it's the same thing, the difference is to register a contract, which is a natural process of the transfer.

If I was to risk the difference of our cash generation, perhaps this is it. I don't know if I answered, if anything was missing, Ricardo, if you'd like to add to this.

I think you covered the main points. What's important, be clear to Pedro is maintain the company with a very conservative and low leverage level, this is a priority.

Because of the scenario we've seen in terms of irrelevant cash generation, considering we have already gone back to leverage levels we were working before the payment of 800 million of dividends in the end of last year, now we become more flexible in relation to how to allocate this capital that is coming back to the company via the Caixa, dividends and buyback. In one moment or other, we might believe that buyback has a better allocation, in another moment, dividend, and we are going to decide based on this.

It's an 18-month program, we're going to execute all the way to the limit approved, but perhaps it's not going to be the total volume if we believe that capital allocation makes more sense to buy back or otherwise, we return to the shareholders. Because we have an expectation to have an important cash generation that allows us to execute the program completely or partially.

We're monitoring what is best to do that in terms of cash. We monitor this every day, but there is nothing mandatory or a predefined volume.

This is something we like to have, and when we have opportunities, we carry it out.

Thank you very much, very clear. Thank you for your answers.

Thank you for the question, Pedro.

We have our next question, JPMorgan, Jonathan.

Thank you, André. A question if you can tell us about the master plan revision in Belo Horizonte approved, and the potential for Direcional in terms of launch increment.

Jonathan, master plan in Belo Horizonte, when we talk about the legislative branch, we don't exactly know when projects will be voted, because it's at the hands of the legislation, right? It has already been approved in the first round, now there is an expectation of it being voted in a second round, but we don't exactly know when.

We believe that it's going to happen in a relatively short period. It is an important priority to go back and work in the city because of the structure, because of public transportation, school, health, proximity to work, like what happens in São Paulo, where we have greater public transportation infrastructure, right, and Belo Horizonte, the downtown is like São Paulo.

I'm very optimistic with the demand here with regards to projects that will be built in this region and possibility of incrementing the number of launches in the downtown. In case the project is approved in the second round, like the first, things will improve and Belo Horizonte should go have an important revitalization, people will want to work on the downtown area, right?

I'm very optimistic here. I don't know if a decision of a purchase should occur specifically based on this.

I think there will be a new demand that today is not in the market, but I think there is demand around Belo Horizonte and around the metropolitan region, where the client doesn't buy in around the region, but downtown. We might be selling more in the downtown region of Belo Horizonte and less around in the surrounding areas, right?

Once we have a new demand and of new opportunity, this is positive news that can give a positive impact in our results with a greater comfort in relation to the numbers with regards for Direcional. I think it's positive, and it shouldn't be a purchase decision, I think it's going to be part of this.

I'm very optimistic with what the plan and this specific project has. I think we have a lot of projects in the area, we're going to be one of the companies working once this law is approved.

I think it's one more positive point, among the others we have in our business.

Thank you for your question, Jonathan. I see that we don't have any more questions here, I would like to thank you all that participated here with us and allow the IR team to answer any more questions you might have.

Now the final

Once again, I want to thank your participation, your questions, and stress our optimism with the resilience of our business independent of the events. We have our operations in all the different cities have this resilience, and we made it very clear in the Q&A in the maintenance of our strategy during the last years, which remain the same, very similar to what we had last year.

We don't see any kind of change, we continue working trying to deliver the best results possible for our shareholders, always going after the satisfaction of our clients. Thank you very much, and let's continue with our work.