DIRECIONAL ENGENHARI

DIRR3
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Direcional Engenharia S A : 4Q21 Operating Preview

01/19/2022 | 06:46pm

OPERATING PREVIEW

4Q21

Belo Horizonte, January 19, 2022 - A 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 fourth quarter of 2021 (4Q21). Unless otherwise expressed, the information in this document is expressed in the national currency (Brazilian Reais - R$ or BRL) and the Potential Sales Value ("PSV") demonstrates the value consolidated (100%).

NOTICE TO THE MARKET

4Q21 AND 2021 OPERATING PREVIEW

  • RECORD-HIGHLAUNCHES IN 2021 (BRL 3.1 BILLION), GROWING 78% VERSUS 2020;
  • NET SALES RECORD IN 2021 (BRL 2.4 BILLION), A 45% INCREASE OVER 2020;
  • RIVA'S BEST QUARTER IN NET SALES (BRL 239 MILLION), GROWING 152% VERSUS 4Q20.

HIGHLIGHTS

  • Launches reached BRL 693 millionin the quarter and BRL 3.1 billionin the year: the highest annual level ever achieved in Company's history.
  • Net Sales of BRL 668 millionin 4Q21, setting new all-time high: the 6th record in the last 7 quarters.
  • In 2021, Net Sales reached BRL 2.4 billion, a growth rate of 45%versus 2020.
  • Net Sales Speed ratio (VSO) of 17%in the quarter.

RIVA

  • Riva's Launches reached BRL 358 millionin 4Q21, a 54%growth relative to 4Q20.
  • In 2021, Launches totaled BRL 1.3 billion, growing 368%versus 2020.
  • Net Sales of BRL 776 millionin 2021, up 178%on an annual basis.
  • Riva's VSO reached 19%in the quarter.

1

OPERATING PREVIEW

4Q21

LAUNCHES

In 4Q21, Direcional launched 10 new projects, totaling a PSV of BRL 693 million (BRL 634 million % Company), in line with the figures of 4Q20 and 36% below 3Q21 levels. The mix of launches came in well-balanced in the quarter, with Riva representing a little more than half of the launched PSV.

The total volume launched in 2021 reached the unparalleled level of BRL 3.1 billion, establishing a 78% growth related to 2020. Thus, the Company recorded the highest level in its history in this key metric, reporting important growth on an annual basis both in Direcional products (+24%) and in Riva products (+368%).

Launches

Launches Track Record

(PSV 100% - BRL million)

(PSV 100% - BRL million)

+78%

3,138

3,138

1,293

1,905

1,946

1,763

-1%

1,763

276

1,109

1,081

832

697

693

-36%

1,845

621

1,487

502

231

358

466

459

336

4Q20

3Q21

4Q21

2020

2021

2015

2016

2017

2018

2019

2020

2021

Riva

Direcional

Table below provides further information on projects launched in 4Q21 and 2021:

Launches

4Q21

3Q21

4Q20

%

%

2021

2020

%

(a)

(b)

(c)

(a/b)

(a/c)

(d)

(e)

(d/e)

PSV Launched - 100% (BRL '000)

693,381

1,080,620

697,307

-35.8%

-0.6%

3,137,984

1,762,850

78.0%

Direcional

335,827

459,356

465,813

-26.9%

-27.9%

1,845,200

1,486,620

24.1%

Riva

357,554

621,265

231,494

-42.4%

54.5%

1,292,784

276,231

368.0%

PSV Launched - % Company (BRL '000)

633,817

927,228

650,259

-31.6%

-2.5%

2,677,635

1,526,597

75.4%

Direcional

335,827

459,356

418,765

-26.9%

-19.8%

1,597,807

1,272,734

25.5%

Riva

297,990

467,872

231,494

-36.3%

28.7%

1,079,827

253,862

325.4%

Launched Units

3,146

3,764

3,701

-16.4%

-15.0%

13,534

10,043

34.8%

Direcional

1,909

1,800

2,749

6.1%

-30.6%

9,103

8,875

2.6%

Riva

1,237

1,964

952

-37.0%

29.9%

4,431

1,168

279.4%

Average % Company

91.4%

85.8%

93.3%

6 p.p.

-2 p.p.

85.3%

86.6%

-1 p.p.

Average Price (BRL/unit)

220,401

287,094

188,410

-23.2%

17.0%

231,859

175,530

32.1%

Direcional

175,918

255,198

169,448

-31.1%

3.8%

202,702

167,506

21.0%

Riva

289,049

316,326

243,166

-8.6%

18.9%

291,759

236,499

23.4%

2

OPERATING PREVIEW

4Q21

CONTRACTED NET SALES

Contracted Net Sales totaled a PSV of BRL 668 million (BRL 538 million % Company) in 4Q21, up 28% from the year-ago quarter, and up 4% when compared to 3Q21. Once again, Direcional set its best quarter in terms of Net Sales - the 6th record in the last 7 quarters.

In 2021, Net Sales reached BRL 2.4 billion, a 45% growth relative to the contracted PSV of 2020. This level marks 2021 as the Company's best year in terms of Net Sales.

It is worth mentioning the role played by Riva in the sales mix, reporting an increase of 178% year-over-year and contributing significantly to the numbers achieved.

Net Sales

Net Sales Track Record

(PSV 100% - BRL million)

(PSV 100% - BRL million)

+45%

2,440

643

668

19

614

1,680

776

523

515

23

458

279

401

371

+28%

336

326

298

287

643

668

1,645

523

1,378

3

239

5

+4%

95

16

236

412

403

423

4Q20

3Q21

4Q21

2020

2021

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21

Old Harvest

Riva

Direcional

Table below consolidates the information on contracted Net Sales in 4Q21 and 2021:

Contracted Net Sales

4Q21

3Q21

4Q20

%

%

2021

2020

%

(a)

(b)

(c)

(a/b)

(a/c)

(d)

(e)

(d/e)

PSV Contracted Net Sales - 100% (BRL '000)

667,758

642,716

522,749

3.9%

27.7%

2,439,934

1,680,302

45.2%

Direcional

423,415

402,842

412,117

5.1%

2.7%

1,644,732

1,378,312

19.3%

Riva

239,152

236,459

94,723

1.1%

152.5%

776,149

278,829

178.4%

Old Harvest1

5,190

3,414

15,909

52.0%

-67.4%

19,054

23,161

-17.7%

PSV Contracted Net Sales - % Company (BRL '000)

537,662

525,002

446,741

2.4%

20.4%

2,017,273

1,407,756

43.3%

Direcional

358,639

342,509

352,909

4.7%

1.6%

1,388,816

1,144,424

21.4%

Riva

175,889

180,159

83,158

-2.4%

111.5%

615,248

249,078

147.0%

Old Harvest

3,135

2,334

10,675

34.3%

-70.6%

13,209

14,254

-7.3%

Contracted Units

3,146

3,211

2,749

-2.0%

14.4%

12,227

9,061

34.9%

Direcional

2,318

2,370

2,401

-2.2%

-3.5%

9,429

7,969

18.3%

Riva

813

831

303

-2.2%

168.3%

2,742

1,022

168.3%

Old Harvest

15

10

45

50.0%

-66.7%

56

70

-20.0%

VSO in PSV

17%

17%

17%

0 p.p.

0 p.p.

43%

40%

3 p.p.

Direcional

17%

16%

18%

1 p.p.

-1 p.p.

44%

43%

2 p.p.

Riva

19%

21%

16%

-2 p.p.

3 p.p.

43%

36%

8 p.p.

Old Harvest

4%

3%

9%

1 p.p.

-4 p.p.

12%

12%

0 p.p.

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

3

OPERATING PREVIEW

4Q21

NET SALES SPEED (VSO)

In 4Q21, Net Sales Speed, measured by the VSO index (sales-over-supply ratio), reached 17%. The VSO of projects at Direcional, excluding Old Harvest segment, also reached 17% in the quarter. The VSO of Riva segment reached 19% in the same period.

Net Sales and VSO

(PSV 100% - BRL million)

26%

18%

20%

18%

21%

19%

17%

17%

17%

17%

17%

17%

16%

16%

17%

Old Harvest Sales

9%

Riva Sales

5%

2%

3%

4%

Direcional Sales

Direcional VSO

614

643

668

Consolidated VSO

5

3

523

515

3

Riva VSO

239

178

236

16

8

Old Harvest VSO

95

122

412

385

433

403

423

4Q20

1Q21

2Q21

3Q21

4Q21

INVENTORY

Direcional ended 4Q21 with 14,627 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 only 5% of the total PSV refers to completed units, with 2% related to Direcional projects (ex-OldHarvest), and less than 1% related to Riva products.

PSV Total

PSV % Company

Breakdown of Inventory at

Direcional

Riva

Old Harvest

Total

Direcional

Riva

Old Harvest

Total

Market Value

In progress (BRL million)

2,063

1,031

0

3,094

1,737

787

0

2,523

% Total

63%

32%

0%

95%

65%

30%

0%

95%

Completed (BRL million)

49

3

110

163

43

3

93

139

% Total

2%

0%

3%

5%

2%

0%

4%

5%

Total (BRL million)

2,113

1,034

110

3,257

1,779

790

93

2,662

% Total

65%

32%

3%

100%

67%

30%

4%

100%

Total Units

10,772

3,548

307

14,627

10,772

3,548

307

14,627

% Total Units

74%

24%

2%

100%

74%

24%

2%

100%

4

OPERATING PREVIEW

4Q21

LANDBANK

During 4Q21, 18 plots of lands were acquired, with a construction potential of 8,115 units and a PSV of BRL 1.9 billion (BRL 1.7 billion % Company).

The average cost of acquisition in the quarter was equivalent to 12% of PSV, and 83% of the payment shall be made via swaps, which causes a reduced impact on the Company's cash position in the short term.

In 2021, land acquisitions totaled a PSV of BRL 6.8 billion (BRL 6.3 billion % Company), with an average cost of 13% of the PSV, and with 75% of the payment to be made through swaps.

Direcional's landbank ended 4Q21 with a development potential of 152 thousand units and a PSV of BRL 27 billion (BRL 25 billion % Company).

CASH GENERATION (CASH BURN) ¹

In 4Q21, there was a cash generation in the amount of BRL 18 million. As a result, in 2021, the Company reported a cash burn of BRL 19 million.

As discussed in previous releases, the cash burn observed is due to the significant operational growth that the Company has been reporting throughout the year, which allowed an important expansion in the volume of launches, and whose growth rate reached expressive 78% in the comparison between 2021 and 2020.

In addition, the strategy of anticipating the purchase of inputs before price increases, adopted by the Company in the first quarters of the year, aiming the reduction of most of the inflationary effects, as well as the maintenance of solid levels of gross margin, also contributed to this result.

It is worth noting that Direcional reduced its leverage by BRL 69 million in 4Q21, of which BRL 18 million in cash generation and another BRL 51 million through the sale of treasury shares and the subsequent contracting of a swap indexed to shares issued by the Company, in an equivalent position, within the scope of the share buyback program, approved in December 2021 and valid for 18 months, according to the Material Fact disclosed on the date.

Cash Generation by Quarter

Cash Generation by Year

(BRL million)

(BRL million)

69

51

362

15

18

158

167

146

76

-23

53

38

-29

-71

-19

1Q21

2Q21

3Q21

4Q21

2013

2014

2015

2016

2017

2018

2019

2020

2021

Treasury Shares Operation / Swap

Cash Generation

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.

5

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Disclaimer

Direcional Engenharia SA published this content on 19 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 January 2022 23:45:05 UTC.

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