Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Iguatemi SA (BSP:IGTI3, Financial) reported sales growth of 9.7% above the industry average, demonstrating strong performance and resilience in its portfolio.
- The company's occupancy rate reached 95.9%, indicating successful efforts in reducing vacancies and enhancing the quality of its tenant mix.
- Significant brand inaugurations, such as Balenciaga and Tiffany, are expected to enhance the shopping experience and attract more customers.
- The company has successfully managed its debt, with a net debt to EBITDA ratio of 1.67 times, and plans to maintain leverage below two times.
- Iguatemi SA (BSP:IGTI3) received recognition for its workplace environment, achieving high favorability in the Great Place to Work survey and receiving a mental health stamp.
Negative Points
- The exit of San Carlos and the sale of 18% of Fabio impacted operational indicators and results, causing some fluctuations in figures.
- Marketplace operations are undergoing revitalization, leading to temporary closures and impacting sales figures.
- The company faces challenges in maintaining low delinquency levels, with expectations of potential increases in the future.
- There is a need for significant capital allocation for expansions and acquisitions, which may impact cash flow and leverage.
- The company is navigating a complex M&A process with Brookfield, which involves negotiations and potential changes in asset ownership.
Q & A Highlights
Q: What are Iguatemi's plans for capital allocation and leverage levels over the next 12 months?
A: Guido Oliveira, CFO, stated that Iguatemi ended with a leverage of 1.67 times net debt to EBITDA. The company plans to maintain leverage below two times net debt to EBITDA, considering potential acquisitions and capital optimization. They aim to manage leverage through cash flow growth and strategic asset sales, ensuring it does not exceed two times by the end of 2025.
Q: Can you explain the increase in costs, particularly parking and third-party costs, and the trajectory for the coming quarters?
A: Guido Oliveira explained that the increase in parking costs was due to a migration of expenses to the P&L account, which created a lower base for comparison. Third-party costs rose due to a shift from in-house marketing to third-party services. These changes will stabilize, and costs are expected to decrease as a percentage of revenue.
Q: How does the introduction of international brands like Balenciaga affect occupancy costs, and what is the outlook for these costs?
A: Cristina Betts, CEO, noted that while international brands have lower occupancy costs as a percentage of sales, their nominal costs are high due to high sales per square meter. The overall impact on total occupancy costs is minor. The company aims to increase occupancy costs over time through lease renewals and improved tenant mix.
Q: What is the status of the H&M store opening, and are there exclusivity agreements in place?
A: Cristina Betts confirmed that H&M will open its first store in Brazil at Iguatemi São Paulo. While there is no exclusivity, Iguatemi has a rollout plan for H&M across its malls. The company has worked extensively to accommodate H&M, and the store is expected to open in the first half of 2025.
Q: How does Iguatemi plan to manage its debt and take advantage of favorable market conditions for liability management?
A: Guido Oliveira mentioned that Iguatemi has been proactive in managing its debt, taking advantage of favorable market conditions to refinance at lower costs. The company plans to continue exploring opportunities to optimize its debt structure, potentially leading to further reductions in average debt costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
