Multiplan Empreendimentos Imobiliários S.A. (MULT3) Earnings Call Transcript

Good morning, everyone, and welcome to the earnings call for the second quarter of 2026 of Multiplan. We have here with us today the Executive Board of the company. We'd like to let you know that the presentation of these results is available for download at the website of Multiplan for Investor Relations. Before continuing, we would like to mention that any forward-looking statements that are based that are done during the earnings call regarding the business perspectives is based on beliefs and assumptions of the Multiplan management and is based on information that is currently available to the company. All these forward-looking statements are not guarantees of performance. They involve risks and uncertainties and premises. And these are related to forward-looking statements, and therefore, these may materialize or not. Investors should understand that general economic conditions, industry conditions and other factors, operational factors may or may not affect the results of the company and may lead to results that are materially different from those stated in the forward-looking statements. Now I'd like to give the floor to the CEO Eduardo Peres, he will start the presentation. The floor is yours.

Good morning, everyone. This was another quarter that once again demonstrates the strength of our business model. It's a model that was built on a very simple principle. The quality that drives results. When we invest in quality and the quality of our assets and the customer experience, the results will follow. We have achieved another record for sales for the second quarter. Our shopping malls have generated over BRL 7 billion. And at the same time, we've had occupancy rates above 96%. And we've had another quarter of negative net delinquency. The revenue from rent of the stores are growing every quarter since the pandemic. The cash generation was record, and the margins are amongst the highest in the sector. The net income has increased over 60% in regards to the second quarter of '25. When we look at the company, we see that it's still generating efficiencies. We had a recovery of expenses that was very significant, and we have a record NOI margin on the quarter. We also have accelerated the PIS/COFINS tax credits, and we have created consistent value for our shareholders. These are very important. The clients and the tenants always choose the highest quality assets in the market, and that's no coincidence. The consumers have changed. They seek more convenience, dining and entertainment experiences. We understand that transformation for a long time. And we continue to update our malls to service the expectations of our clients. In March, we have the expansion of MorumbiShopping Mall. Today, it grows, and it's an expansion that has transformed the mall. It brought our brands to a new way of consuming our sales. And the growth of the stores -- the same-store growth has reached 10%, reinforcing the positive impact in the renovation throughout the mall. And also, we have the expansion of [ BH Shopping ] in this quarter. For the next month, we are increasing the expansion of BarraShopping and the 10th expansion of ParkShopping in Brasilia, which is 100% leased and in an advanced stage of construction. With these deliverables, we will have 7 expansions that are concluded over the next -- over the last 3 years, and over 50,000 square meters of GLA. These are projects that are not only physical growth, they demonstrate our ability to continuously replenish our mature assets and keep them relevant for those that are customers of our malls and those of future generations. In August, we will launch Lake Baikal, which is another milestone in our real estate development strategy. And in fact, this strategy has intensified. We've announced this month the sales of 3 land plots for development of mixed-use projects, one adjacent to ParkShopping Jacarepaguá and 2 others at ParkShoppingCampoGrande and ParkShopping Canoas. These developments reinforce our vision of integrated mixed-use neighborhoods connected to our shopping malls. Digital innovation is also one important lever of our business. The Multi app has surpassed 10.5 million downloads, and we'll continue to strengthen our relationship with both consumers and tenants. In the first half of the year, the sales captured through the app has grown 20% in comparison to the same period last year. And over the last 12 months, we have generated over 63 million interactions. Still within the innovation, we are using artificial intelligence to enhance the customer journey across our malls, making it more seamless and more personalized. Artificial intelligence has been an important tool in the optimization of internal processes, proportioning productivity gains and more operational efficiency. It's so relevant as the results of the quarter is what we are building for the future. We have planned for the next expansion cycle '27 with Jundiaí, SãoCaetano, BarraShopping and VillageMall. Our land bank includes 130,000 square meters of GLA of detailed expansions. We have, therefore, 15 future expansions across 11 malls. Throughout 5 decades, Multiplan has helped to transform entire regions. This transformative capability remains present in every expansion, every renovation and every real estate development that we undertake. We will continue to see the changes in behavior and preferences of the new generations because consumers evolve and Multiplan evolves with them. And that's why we are positioned to continue to be the leader of the sector for the next 20 years. Thank you very much to all of our employees for their dedication and the shareholders and analysts and members of the press for their interest. Thank you very much.

[Operator Instructions] First one, Ygor Altero from XP.

Two questions on our side. And I wanted to understand, first, what is your overview? How do you see the tax reform? How are the operational challenges of this tax reform, the communication with the players that are less professional. So I wanted to know if you see tenants that are ready, therefore. And the second point that I wanted to talk about is the NOI margin. It's an impressive threshold that you've achieved. Do you see continuity in this high-level threshold? And I wanted to understand how can we see the gains of efficiency. You've done a lot, but I wanted to understand if you think that there is a space in the future for growth.

This is Eduardo. Thank you for the 2 questions, and I'm going to start by the last. You talked about efficiency and NOI margin. Well, it's the objective of the company to be efficient, but more than being efficient, our objective is to get the company closer to those that are going to the mall. That is key. All of the importance of the efficiency of the company depends on how much the malls are visited, how much the consumers understand that we're working for them. So it's a constant looking for efficiency in the company. I think that this quarter is key even with the movements that we've had, it was very positive for everyone. And this is an incessant drive. So from here to the end of the year, we're going to have changes, and we cannot predict the future. Sometimes we get it right, sometimes we get it wrong. The tax reform, if you want to -- well, even to complement that, it's the same question that happened in the first quarter, and it's a continuous work. And you see that in the last 12 quarters, we have a margin over 90%. It's because of the effort -- continuous effort of the company. And to close this, why do I talk about the mall? Because the dependency relations in this for this company is not the mall that depends on Multiplan. Multiplan that depends on the mall. So we will only have results in ever better results if we are very good in the end, and this is the incessant drive of the company. And I'm going to answer your question on the tax reform in a different way. The biggest focus and the biggest dedication that we have in regards to the tax reform is to be technically ready to service the demands of the tax reform. That has been the greatest dedication, and we've gotten today the tax authority that is delaying the deadline for the issuance of the invoices. So the biggest challenge is to be ready for the tax reform. So we have to be ready for the deadlines that are established by the tax authority. That's the biggest challenge. The other themes are secondary because of the effort of building all the systems to service the demands of the tax authority. And Igor, you were talking about if we think that the tenants are ready, ready for such a change, which is the tax reform here in Brazil. I can answer you from my feeling, I think that not. I think that there's a lot of people that are worried about the economic scenario that we are living today and that we're going to find with the tax reform. The biggest and the most organized, certainly, they're going to be ready, but the smaller, not so much.

Next question, Matheus de Meloni from Santander Bank.

So I have 2 questions. First, even going back to the theme, the NOI margin. We had a reversal in the quarter. So I wanted to understand what can we think as a recurring from here on to the future? And if there is any change in the provisioning and aging? Is there any change in that front? And the second question in regards to the credit, PIS/COFINS tax credits. What would be the timing for the release of the credit in regards to the impact to cash generation and also looking to 2027 with the end of the PIS/COFINS tax, how can you reimburse that for how long? Can you give us some color on that?

Matheus, you asked 2 good questions that we don't have an answer. At least I don't have a direct question -- a direct answer, sorry. First, the provisioning, that's very dynamic. All the systems will change. And as you recover, you increase the delinquency. So you've seen in the first quarter, we had a bigger provisioning, and that impacted all the models and all the provisioning matrix. In the second quarter, we managed to recover a good quantity that impacted positively all the project -- all the process of aging for the company for this provisioning. So -- what is the expectation, Eduardo commented. We are going to work so we can have a high productivity. So when we can help the tenant to sell, and you've seen in the quarter that we have the challenges of the distractions of the World Cup, high interest rates and you have positive sales, you see that our work is in the right direction and you can value your space so that the tenant will not be delinquent. And we have that -- the distribution of the proceeds of the company that might go faster or quicker. I can even comment. We have a credit and it can be compensated with the PIS/COFINS that is recurrent. So as we have the income, we are going to have the PIS/COFINS and we're going to use that credit to use it. The timing of the usage will be in agreements to the generation. And also, we are going to see it in the future if we have a reimbursement or we will reevaluate all these possibilities, but we have had a detail on that. It's important to have taken this constituted tax credit within this year.

Next question is Kiepher Kennedy from Citibank.

Congratulations on the results. Two on our side. First, the company, as Eduardo has said, we had strong sales and the work that has been done over the last years regardless of the World Cup that we would think that it would be more -- causing more of a hindrance, but it was a facilitator for sports clothing, for example, sales. So I wanted to get your feedback more granular of segments that were better, were worse and is somehow the last game of Brazil for the shopping mall, did it have an effect for the month of July? Can you comment something on that? Secondly, in regards to the parking lot revenue, I think that is the strongest, one of the biggest ones for the rent and it's your merit for the work that you've -- well, there is a flow effect, the effect of BarraShopping. But on average, the effect of price is the one that had the -- pulling up the growth of 70% year-on-year. So I wanted to understand the current levels. There is a big demand. The demand is on the side of the malls. Up until what point do you think that we can continue with that price effect that is so relevant. Next year, we have the tax reform, and we will have a new increase for the price for the consumer. Can we have that effect of price so high on the inflation for so long?

Thank you, Kiepher. And I'm going to answer with the World Cup. So it's not just the World Cup. Any event that is strong in the television is bad for the shopping malls. That's it. It's bad for commerce. Olympics, World Cup, sometimes even the end of the soap opera will hinder the sales of the shopping mall, but it's very pinpoint. It's just a day and then that's it. So don't be too attached to the day. The day of the game at 4:00 p.m. as it was the last game of Brazil, it was 4:00 or 6:00. Well, regardless if it's 4:00 or 6:00, and it's a bad day of sales, and it's below what we expected, but it was above to what we could imagine from a World Cup that is so long and with so many interesting games. This is one point. You asked if we think and talking about parking lot and revenue. Well, if I think that we can continue to grow. I am certain that we can continue to grow because everything that we do is for the improvement of the experience of the shopping mall. MorumbiShopping grew, it's a consolidated shopping mall. In the heart of Sao Paulo, we've done a revamp of an area that is relatively small and the impact for the sales of these stores is very big. that is translated that we can achieve the objective, which is to bring the people that are not going to the MorumbiShopping Mall and captivating the people that are already going to the shopping mall. So it's a double work. It's something that started 3 years ago. We've renewed the shopping mall. We planned an expansion. We've changed the communication of the shopping mall. So it's a deep work, and that will continue to happen in other assets. When we made the decision of not building assets, new assets, greenfield and starting to -- because I foreseen and the company realized that there was a lot to find in-house. So if you're going to see the same thing with a higher intensity happening in Brasilia. Brasilia, the shopping mall is going to have a function and now this expansion will give you that function, which is connecting with the stores for the biggest parking lot in the shopping mall. So for those that are going to the shopping mall, the experience is going to be much better. So for you to increase revenue -- well, there was a part that was the reimbursement of the tariff okay, certainly. But a big part are people that are going to the mall, and they didn't go before. So you have more people going than you had before. I'm going to give you a phenomena that is very clear for MorumbiShopping and those that are living close. MorumbiShopping on the weekend, we have 500,000 cars with the corporate, and we have 2,300 available seats at the weekend. That didn't happen. So I can guarantee that since we're not going to stop to invest in improving the assets that we have, I am certain that, that will continue to grow. That happened in Curitiba, ParkShoppingBarigüi, we see an increase of vegetation and transit that is happening in Morumbi and Diamond Mal, Maceió, and it's the same thing that we are projecting for Brazil. So it's important that you understand the strategy of the company. I'd like to imagine we have demand by space, BarraShopping, BarraShopping, JundiaíShopping. If had today another 10,000 square meters of stores in BarraShopping that would be allocated. It's physically, it's difficult to grow. And then you get into the limits of what you can do with the enterprise. But since technology of construction never ceases, it only improves, the cities contribute to that. So the cities, they started to understand that shopping malls do not need the amount of parking lots that they have today. So you have all the mobility apps working for the enterprise. The stores are selling more because of deliverables and more people going to the shopping mall with a less use of parking lot, the use of Rio de Janeiro. You have a lot that you can build within the next 2 years, acquiring from the municipality, the parking lot of the shopping mall. Did we explore this? We are at the beginning. There is a lot of things to explore.

Next question, Herman Lee, Bradesco.

Just one question. Looking at the breakdown of the same-store sales, same-store sales of shopping of clothing apparel is growing more than satellite. So the big stores might be Renner, São Paulo, those are the crown jewels. But if you can tell us what are the crown jewels for clothing apparels and what explains the performance that is stronger because we have the perception that the segment was at a challenging time. So having more color would be very good.

Well, this one, we had the change of mix. [Technical Difficulty]

Just one second. So we had a bit of a technical issue. Please wait. We are connecting. So just one second.

So your question is complex because as a change of area, there are a series of things that happened in the mix of the shopping malls. So when you look at the same store, you're looking at a segment from 1 year down the line. When you see this, you increase the area of the shopping mall in this moment, which will distort the calculation of the sales. I didn't understand your doubt in regards to the satellite and the crown jewel of clothing apparel.

Can you clarify? Well, the same-store sales of the crown jewels are higher than the satellite. So our perception is that the crown jewels were not at a very favorable one, favorable moment. So how do you see the sales of the well-known stores of clothing apparel?

Well, think about what's happening to that number. When you want to look at our portfolio, well, you have a clothing store that closes for refurbishing at the moment. So same-store sales of crown jewel of clothing apparel dropped what happens in the next quarter. They opened much stronger. And there was a structural change. We're going through this moment. Zara is doing a movement that is very significant with important shopping malls. You have an increase of BarraShopping. There is Latin America, you have new brands in Brasilia and as we're going to get in MorumbiShopping. And these are areas that were closed in this quarter. So they impact negatively as a whole. So I understand your question and your concern. But when you go to the physical and you understand what's happening with the dynamic of the shopping mall, there is a change that will happen in the second semester that will impact positively all the stores. So what I wanted to disconnect is that point, macro point of looking at the perception that the wholesale -- that the retail is not doing so well. And they're looking at the -- our portfolio, which is very specific for our strategy of bringing brands and random movements, as Eduardo has said. And these are good news because you have Zara that is doing well in Brazil that wants to grow in Brazil and wants to bring all the other brands to Brazil and for Multiplan. So these are good conversations. And today, we are working with the chess. If I get everybody in BarraShopping, MorumbiShopping, everybody wants the same ones. So it's a chess that benefits most people.

The next question, Elvis Credendio, Itaú.

First, about the expenses and evaluations and other operational expenses. You had a growth that was reasonable. So I wanted to understand if along those lines, something that is nonrecurring. I wanted to understand the magnitude of those effects. So what is relevant, what is not relevant? What can we expect from now on? Second question is the financial results, positive response on our side. And when we look in these lines, we have real estate enterprises and other revenues. I wanted to understand what is going along those lines and what can explain that? And what can we expect in the future?

Elvis, thank you for the questions. Expenses. Well, you had 2 nonrecurring effects. One last year in the second quarter of last year, which was a reversal of provisioning that happened. And in this quarter, specifically 2026, you had an expense that is pinpointed with the changes that we've done in the company. So these are pinpoint issues. I don't see anything that is changing in a continuous way. In regards to the payout of the shares, it was a marking to the curve to the market that with our program in the second quarter that you have on the expenses when you remunerate, you have to pass on the tranches and you have to do the marketing on the market for the effect of the labor expenses. That's why you have a higher price than the shares that were displayed at the time. And there is a lot of things that resulted in this improvement. The first one is good, small. There was a small drop. And the second, there is a reduction in the gross debt of the company, so that's affecting positively. Third, we had the amortization of debt with higher costs and a liability management that is positive for the financial results. So there was -- there were several factors. We talked about real estate, Golden Lake, I have a few units that are financed not by us. That's why you have the result on the real estate, which is a carryover -- positive carryover of that finance. The negative is in the expenses.

Next question is Tainan Costa, UBS.

I wanted to talk about the P&L and the payout of naming rights. Well, I think the 2 points here. I wanted to understand how that data talks about with your balance sheet with the deferred revenues, while they've decreased throughout time at the same time that the expenses, the -- well, this is a dynamic for the volume of the expansions that you delivered or there is a change in your strategic line? And how do you think about this line in the future? Should it be in the threshold? Are we talking about a level of growth? Or there is something in the quarter that we didn't realize as we had in the previous line or even it was even influenced by the expansion of Morumbi. So I wanted to get your two cents on that copyright.

I think that the growth on the copyrights, it's a negative result. But first, we have an area if you look -- the expansion we delivered in the last 2 months with 20,000 square meters. We have another 20,000 meters that will be delivered in Barigüi, Diamond Mall 2 years ago. You have a change -- big change of mix. If you look at the turnover of stores, historical, it's decreasing, but it's much higher. So if you get it since the pandemic, we're going to get a big change of mix. And obviously, a few things is incentives to change, and that will be recognized through the lifetime of the contract of the store. So -- the biggest level, the record of this company of the copyright was Vila Olímpia. It's interesting, 20% of the CapEx. So you can see where Vila Olímpia is done there today. And it's a completely financial decision. Let's capture the most that we can. And we didn't give the correct attention to the mix of the shopping mall. And what happened? It has a short lifetime. You have a short amount of -- level of success. We could have had less results, certainly. I would have preferred to have the second option. But unfortunately, the past of the past, what we can look forward is the future. And now we are going down the right path. Well, the reconciliation of that with the accounting is the cost and you are appropriating.