Direcional Engenharia S A : 1Q22 Operating Preview

Belo Horizonte, April 11th, 2022 - Direcional Engenharia S.A., one of the largest homebuilders and real estate development companies in Brazil, focused on the development of low-income and medium-income projects and operating in several regions of the Brazilian Territory, discloses here its operating statements for the first quarter of 2022 (1Q22). Unless otherwise stated, the information in this document is expressed in national currency (Brazilian Reais - BRL or BRL) and the Potential Sales Value ("PSV") demonstrates the consolidated amount (100%).

NOTICE TO THE MARKET

1Q22 OPERATING PREVIEW

✓ NET SALES OF BRL 622 MILLION IN 1Q22, GROWING 21% WHEN COMPARED TO 1Q21;

✓ LAUNCHES REACHED BRL 599 MILLION IN 1Q22, 4% ABOVE 1Q21 LAUNCHED PSV.

HIGHLIGHTS

▪	In the last twelve months (1Q22 LTM), launches totaled BRL 3.2 billion, a 44% growth versus
1Q21 LTM.
▪	Contracted net sales reached BRL 2.5 billion in 1Q22 LTM, a growth rate of 34% in relation to
the volume of 1Q21 LTM.
▪	In 1Q22, net sales of Direcional projects reached BRL 448 million, up 6% in relation to 4Q21
and 16% in comparison with 1Q21.
▪	Inventory net sales speed index (Inventory VSO) reached 17% in the quarter.
▪	In its first month of activity, Direto originated more than BRL 40 million in real estate credit
operations.
RIVA
▪	In 1Q22 LTM, Riva's launches reached BRL 1.4 billion, a 240% increase versus 1Q21 LTM.
▪	In 1Q22, net sales grew 40% when compared to 1Q21, reaching BRL 171 million.
▪	Considering 1Q22 LTM, Riva's net sales totaled BRL 825 million, up 136% versus 1Q21 LTM.

LAUNCHES

Direcional launched 9 new projects in 1Q22, totaling a PSV of BRL 599 million (BRL 557 million % Company), 4% above the amount launched in 1Q21 and 14% below 4Q21. The representativeness of Direcional's products in the mix of launches reached 66%, while Riva's represented 34% of launched PSV.

Considering the last twelve months ended in the 1st quarter of 2022 (1Q22 LTM), the volume of launches grew 44% compared to the same period of the previous year (1Q21 LTM). In this sense, it is worth noting Riva's important contribution to the total amount launched in the last twelve months.

Launches

(PSV 100% - BRL million)

+44%

3,160

Riva

Direcional

2,200 402

1,369

Table below provides further information on projects launched in 1Q22:

Launches

1Q22 (a)

4Q21 (b)

1Q21 (c)

 (a/b)

 (a/c)

PSV Launched - 100% (BRL '000)

599,069

693,381

577,060

-13.6%

3.8%

Direcional

396,445

335,827

450,862

18.1%

-12.1%

Riva

202,623

357,554

126,197

-43.3%

60.6%

PSV Launched - % Company (BRL '000)

557,281

633,817

454,230

-12.1%

22.7%

Direcional

354,658

335,827

328,032

5.6%

8.1%

Riva Launched Units

202,623

297,990

126,197

-32.0%

60.6%

2,831

3,146

2,471

-10.0%

14.6%

Direcional

2,136

1,909

2,009

11.9%

6.3%

Riva

Average % Company Average Price (BRL/unit)

Direcional

Riva

695 93.0% 211,610 185,602 291,544

1,237 91.4% 220,401 175,918 289,049

462 78.7% 233,533 224,421 273,155

-43.8%

50.4%

2 p.p.

14 p.p.

-4.0%

-9.4%

5.5%

-17.3%

0.9%

6.7%

CONTRACTED SALES

Net sales contracted during 1Q22 totaled BRL 622 million (BRL 508 million % Company), growing 21% versus 1Q21, and dropping 7% versus 4Q21. It is worth noting that March 2022 marked the best month of net sales in Company's history. As a result, Direcional recorded its highest sales volume for a 1st quarter.

In the Direcional segment, net sales reached BRL 448 million in 1Q22, growing 6% over 4Q21 and 16% over 1Q21, confirming the segment's resilience.

In 1Q22 LTM, net sales totaled BRL 2.5 billion (BRL 2.1 billion % Company), a 34% increase in comparison with 1Q21 LTM. In this period, Riva represented about 32% in the sales mix, while Direcional products accounted for 67% of the total sales. In both segments, there was an increase in net contracted PSV.

Net Sales

(PSV 100% - BRL million)

+34%

2,547

Old HarvestRivaDirecional

14

1Q21

4Q21

1Q22

1Q21 LTM

1Q22 LTM

Table below consolidates the information on contracted net sales in 1Q22:

Contracted Net Sales	1Q22	4Q21	1Q21		
(a)	(b)	(c)	(a/b)	(a/c)
Net Contracted Sales - PSV 100% (BRL '000)	621,942	667,758	514,964	-6.9%	20.8%
Direcional	447,912	423,415	385,068	5.8%	16.3%
Riva	171,226	239,152	122,150	-28.4%	40.2%
Old Harvest1	2,803	5,190	7,747	-46.0%	-63.8%
Net Contracted Sales - PSV % Company (BRL '000)	507,991	537,662	438,944	-5.5%	15.7%
Direcional	371,973	358,639	323,468	3.7%	15.0%
Riva	134,559	175,889	110,017	-23.5%	22.3%
Old Harvest	1,458	3,135	5,459	-53.5%	-73.3%
Contracted Units	2,945	3,146	2,702	-6.4%	9.0%
Direcional	2,347	2,318	2,250	1.3%	4.3%
Riva	592	813	430	-27.2%	37.7%
Old Harvest	6	15	22	-60.0%	-72.7%
Net Sales Speed (VSO) in PSV	16%	17%	17%	-1 p.p.	-1 p.p.
Direcional	18%	17%	17%	1 p.p.	1 p.p.
Riva	14%	19%	20%	-5 p.p.	-6 p.p.
Old Harvest	3%	4%	5%	-2 p.p.	-2 p.p.

1 Old Harvest: Comprises projects of the middle income, upper-middle income and commercial segments, developed in the former model.

NET SALES SPEED (VSO)

In 1Q22, net sales speed, measured by the VSO index (sales-over-supply ratio), reached 16%. The VSO of projects at Direcional, excluding Old Harvest segment, reached 18% in the quarter, while the VSO of Riva segment was 14%.

However, it should be noted that a relevant part of the launches took place at the end of the quarter. Consequently, these products did not have enough sales time in the period. In order to properly analyze the speed of sales, disregarding this distortion, the inventory VSO was also calculated, that is, excluding the PSV launched in 1Q22 and its respective sales. In this scenario, the index reached 17%. In Direcional ex-Old Harvest projects, the inventory VSO reached 19%, and in the Riva segment, it was 16%.

Net Sales and VSO	Net Sales and Inventory VSO
(PSV 100% - BRL million)	(PSV 100% - BRL million)
26%	30%

20% 17% 17%

18% 16% 14%

20% 19% 19%

19% 17% 16%

5%

2%

3%

4%

3%

5%

2%

3%

4%

3%

1Q21

2Q21

3Q21

4Q21

1Q22

1Q21

2Q21

3Q21

4Q21

1Q22

Old Harvest Sales

Riva SalesDirecional SalesDirecional VSOConsolidated VSORiva VSOOld Harvest VSO

INVENTORY

Direcional ended 1Q22 with 14,513 units in inventory, totaling a PSV of BRL 3.3 billion (BRL 2.7 billion % Company).

Table below shows the inventory at market value, detailed by stage of construction and by type of product. It is worth mentioning that less than 6% of the total PSV refers to completed units, with 2% related to Direcional projects (ex-Old Harvest), and less than 1% related to Riva products.

PSV Total

PSV % Company

Breakdown of Inventory at Market Value	Direcional	Riva	Old Harvest	Total
In progress (BRL million)	2,046	1,078	0	3,124
% Total	62%	33%	0%	94%
Completed (BRL million)	61	14	111	186
% Total	2%	0%	3%	6%
Total (BRL million)	2,107	1,092	111	3,310
% Total	64%	33%	3%	100%
Total Units	10,561	3,651	301	14,513
% Total Units	73%	25%	2%	100%

Direcional	Riva	Old Harvest	Total
1,697	857	0	2,554
62%	32%	0%	94%
55	14	95	164
2%	1%	4%	6%
1,753	870	95	2,719
64%	32%	4%	100%
10,561	3,651	301	14,513
73%	25%	2%	100%

LANDBANK

Direcional's landbank ended 1Q22 with a development potential of 156 thousand units and a PSV of BRL 28 billion (BRL 25 billion % Company).

The average cost of acquisition was equivalent to 11% of the PSV, and 78% of the payment shall be made through swaps, which causes a reduced impact on the Company's cash position before the beginning of the development of the projects.

During 1Q22, 9 plots of lands were acquired, with a construction potential of 7,800 units and a PSV of BRL 1.6 billion (BRL 1.1 billion % Company).

The average cost of acquisition in the quarter was equivalent to 10% of PSV, and 67% of the payment shall be made via swaps.

Evolution of Landbank (BRL million)	2021 Landbank	1Q22 Acquisitions	1Q22 Launches	Adjustments 1	1Q22 Landbank	1Q22 PSV % Co.
Total PSV 26,807	1,585	(599)	6	27,798	25,276

Units

156,004

1 Adjustments: update of sales price, canceled sales and swaps.

CASH GENERATION (CASH BURN) ¹

In 1Q22, there was a cash consumption in the amount of BRL 34 million. This consumption is due to the relevant operational growth that the Company has been reporting in recent periods, with a significant expansion of launches and sales volumes, in addition to the active management of inventories, with a cautious evaluation regarding the acquisition of inputs, which aims to mitigate possible inflation pressures and to maintain the profitability of projects at levels that the Company considers to be healthy.

1 Cash Generation (Cash Burn): variation in net debt adjusted by payment of dividends, repurchase of shares and the variation in the balance of interest swap operation agreements. Prior unaudited information.

DIRETO

After the approval by the Administrative Council for Economic Defense (CADE), which took place during 1Q22, Direto started its activities in wholesale and retail during the month of February.

According to the Notice to the Market published on April 4th, 2022, in its first month of operations, Direto originated real estate credit operations that exceeded BRL 40 million.