OPERATING PREVIEW

2Q23

Belo Horizonte, July 11th, 2023 - 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 second quarter of 2023 (2Q23). Unless otherwise stated, the information in this document is expressed in national currency (Brazilian Reais - R$ or BRL) and the Potential Sales Value ("PSV") demonstrates the consolidated amount (PSV 100%).

NOTICE TO THE MARKET

2Q23 OPERATING PREVIEW

  • FOR THE FIRST TIME IN HISTORY, DIRECIONAL GROUP EXCEEDS BRL 1 BILLION IN GROSS

SALES IN ONE QUARTER, GROWING 15% VERSUS 1Q23 AND 13% VERSUS 2Q22

  • RECORD-HIGHLAUNCHES IN 2Q23 (BRL 1.5 BILLION): AN 84% GROWTH IN COMPARISON
    WITH THE YEAR-AGO PERIOD

HIGHLIGHTS

▪ In the 1st semester of 2023 (1H23), Launches reached BRL 2.1 billion, up by 49%when compared to 1H22.

▪ Best quarter in Net Sales in Company's history: BRL 962 million, a 20%growth versus 1Q23 and a 15%growth versus 2Q22.

▪ Riva segment totaled BRL 380 millionin Net Sales in 2Q23, +63%over 1Q23 and +61%over 2Q22. ▪ Net Sales of BRL 1.8 billionin 1H23, a 21%growth versus 1H22.

▪ Net Sales Speed ratio (VSO) of 18%in the quarter in the consolidated view.

▪ VSO index of Direcional segment came in at 17%, while Riva's VSO reached 18%. ▪ Cash Generation1 of BRL 22 millionin 2Q23, totaling BRL 29 millionin 1H23.

▪ Direcional's follow-on allowed a successful raising of BRL 429 million, with an expressive excess demand for the shares.

1 - Cash Generation: 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.

1

OPERATING PREVIEW

2Q23

LAUNCHES

Direcional Group launched 15 new projects in 2Q23, representing a PSV of BRL 1.5 billion (BRL 1.1 billion % Company), 138% higher than the volume observed in 1Q23 and 84% above 2Q22. Thus, the Group reached the best quarter in terms of PSV launched in Company's history.

In the period, projects under Direcional brand represented 60%, in terms of PSV, of the total launched, while those under Riva brand accounted for 40%.

Considering the first semester of 2023 (1H23), PSV launched totaled BRL 2.1 billion (BRL 1.7 billion % Company), a 49% increase when compared to the same period of 2022 (1H22). It is worth noting that the PSV launched in the 12-month period ending in 2Q23 (2Q23 LTM) totaled BRL 4.3 billion (BRL 3.6 billion % Company), materializing the significant growth over the last years.

Launches

Launches Track Record

(PSV 100% - BRL million)

(PSV 100% - BRL million)

+49%

4,315

2,068

CAGR:

3,636

+26%

+84%

1,457

1,389

710

3,138

790

576

503

1,905 1,946 1,763

611

+138%

1,109

301

1,358

832

134

880

886

490

477

2Q22

1Q23

2Q23

1H22

1H23

2016

2017

2018

2019

2020

2021

2022

2Q23

LTM

Riva

Direcional

Table below presents further information on 2Q23 and 1H23 Launches:

Launches

PSV Launched - 100% (BRL million)

Direcional

Riva

PSV Launched - % Company (BRL million)

Direcional

Riva

Launched Units

Direcional

Riva

Average % Company

2Q23

(a)

1,456.6

880.3

576.3

1,088.9

711.2

377.7

5,268

3,507

1,761

74.8%

1Q23

(b)

611.2

477.2

134.0

610.5

476.5

134.0

2,762

2,476

286

99.9%

2Q22

Δ %

(c)

(a/b)

790.4

138.3%

489.6

84.5%

300.8

330.2%

703.7

78.4%

467.2

49.3%

236.5

181.9%

3,261

90.7%

2,436

41.6%

825 515.7%

89.0% -25 p.p.

  • %
    (a/c)
    84.3%
    79.8%
    91.6%
    54.8%
    52.2%
    59.7%
    61.5%
    44.0%
    113.5% -14 p.p.

1H23

(d)

2,067.8

1,357.6

710.3

1,699.4

1,187.7

511.7

8,030

5,983

2,047

82.2%

1H22

(e)

1,389.4

886.0

503.4

1,260.9

821.8

439.1

6,092

4,572

1,520

90.8%

  • %
    (d/e)
    48.8%
    53.2%
    41.1%
    34.8%
    44.5%
    16.5%
    31.8%
    30.9%
    34.7% -9 p.p.

2

OPERATING PREVIEW

2Q23

NET SALES

In 2Q23, for the first time in its history, Direcional Group surpassed the BRL 1 billion mark in Gross Sales in one quarter, a growth rate of 15% over the previous quarter and 13% over the same period of 2022.

Net Sales totaled BRL 962 million (BRL 734 million % Company), representing a 20% growth in relation to 1Q23 and a 15% growth in relation to 2Q22. Once again, Direcional set record-highfigures in terms of Net Sales for a quarter. It is worth mentioning that May was the best month of sales in all Direcional Group´s history. In addition, Riva's contribution in the period also stands out, which reached BRL 380 million (BRL 266 million % Company) in Net Sales, also setting up as the best quarter in the history of the segment, representing an increase of 63% versus 1Q23 and of 61% versus 2Q22.

Analyzing the 1H23 period, Net Sales reached BRL 1.8 billion, a growth rate of 21% versus the same period of 2022. In this scenario, projects under Direcional brand accounted for about 65% of the total sold, while Riva segment accounted for 35%.

Considering 2Q23 LTM, Net Sales totaled BRL 3.3 billion (BRL 2.6 billion % Company), confirming the solid evolution of Company´s operations year after year.

Net Sales

Net Sales Track Record

(PSV 100% - BRL million)

(PSV 100% - BRL million)

Old Harvest

+21%

Riva

1,766

3,307

Direcional

1,458

CAGR:

2,999

614

+15%

2

+31%

2,440

407

962

836

803

0

+20%

1,451

1,680

380

1,320

236

234

1,152

914

1,048

601

570

582

494

0

-1

0

2016

2017

2018

2019

2020

2021

2022

2Q23

2Q22

1Q23

2Q23

1H22

1H23

LTM

The table below shows the breakdown of 2Q23 and 1H23 Net Sales:

Net Sales

Net Sales - PSV 100% (BRL million)

Direcional

Riva

Old Harvest1

Net Sales - PSV % Company (BRL million)

Direcional

Riva

Old Harvest

Contracted Units

Direcional

Riva

Old Harvest

Net Sales Speed (VSO) in PSV

Direcional

Riva

Old Harvest

2Q23

1Q23

2Q22

Δ %

Δ %

1H23

1H22

Δ %

(a)

(b)

(c)

(a/b)

(a/c)

(d)

(e)

(d/e)

962.5

803.4

835.7

19.8%

15.2%

1,765.9

1,457.6

21.1%

581.8

570.2

600.5

2.0%

-3.1%

1,152.0

1,048.5

9.9%

380.3

234.0

235.6

62.5%

61.4%

614.3

406.8

51.0%

0.4

-0.8

-0.5

-146.2%

-183.8%

-0.4

2.3

-118.9%

733.9

642.9

674.2

14.2%

8.9%

1,376.8

1,182.2

16.5%

467.7

463.2

493.7

1.0%

-5.3%

931.0

865.7

7.5%

265.8

180.0

180.6

47.6%

47.2%

445.8

315.1

41.5%

0.4

-0.4

-0.1

-194.6%

-509.7%

0.0

1.4

-101.5%

3,575

3,246

3,920

10.1%

-8.8%

6,821

6,865

-0.6%

2,458

2,532

3,118

-2.9%

-21.2%

4,990

5,465

-8.7%

1,116

716

804

55.9%

38.8%

1,832

1,396

31.2%

1

-2

-2

-150.0%

-150.0%

-1

4

-125.0%

18%

17%

20%

1 p.p.

-3 p.p.

28%

31%

-3 p.p.

17%

19%

23%

-2 p.p.

-6 p.p.

29%

35%

-5 p.p.

18%

13%

17%

5 p.p.

1 p.p.

26%

26%

0 p.p.

1%

-3%

0%

4 p.p.

1 p.p.

-2%

2%

-4 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

2Q23

NET SALES SPEED (VSO)

Despite the record-breaking volume of Launches in the quarter, Net Sales Speed, measured by the VSO index (sales-over-supply ratio), reached 18% in 2Q23 in the consolidated view, representing an increase of 1 p.p. when compared to the previous quarter.

The VSO of projects at Direcional (excluding Old Harvest segment) came in at 17% in the quarter, while the VSO of Riva segment reached 18% in the period, versus 13% in 1Q23.

Net Sales and VSO

(PSV 100% - BRL million)

23%

19%

19%

20%

19%

17%

18%

17%

19%

17%

18%

17%

15%

13%

12%

847

962

836

803

0

1

694

380

Old Harvest Sales

236

326

234

Riva Sales

207

Direcional Sales

601

520

489

570

582

Direcional VSO

0

-2

-1

Consolidated VSO

Riva VSO

2Q22

3Q22

4Q22

1Q23

2Q23

INVENTORY

At the end of 2Q23, Direcional Group's Inventory had 16,923 units, accounting for a PSV of BRL 4.6 billion (BRL 3.8 billion % Company).

Table below shows the Inventory at market value, detailed by stage of construction and by the type of product. It is worth mentioning that about 2% of the total PSV refers to completed units, with about 1% related to Direcional projects (ex-Old

Harvest products).

Total PSV

% Company PSV

Breakdown of Inventory at Market Value

In progress (BRL million)

% Total

Completed (BRL million)

Direcional

Riva

Old

Total

Harvest

2,799

1,716

0

4,515

61%

37%

0%

99%

25

3

40

68

Direcional

2,405

63%

19

Riva

Old Harvest

Total

1,338

0

3,743

35%

0%

99%

2

24

46

% Total

1%

0%

1%

1%

1%

0%

1%

1%

Total (BRL million)

2,824

1,719

40

4,583

2,425

1,340

24

3,789

% Total

62%

38%

1%

100%

64%

35%

1%

100%

Total Units

12,086

4,721

116

16,923

12,086

4,721

116

16,923

% Total Units

71%

28%

1%

100%

71%

28%

1%

100%

4

OPERATING PREVIEW

2Q23

LANDBANK

At the end of 2Q23, Direcional Group landbank totaled a development potential of 179,670 units with a PSV of BRL 35.1 billion (BRL 31.6 billion % Company).

The average cost of acquisition was equivalent to 11% of the PSV, and 82% 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.

Evolution of Landbank

2022

1H23

1H23

(BRL million)

Landbank

Acquisitions

Launches

Total PSV

32,459

5,210

(2,068)

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

Adjustments1

1H23

Landbank

(467)

35,134

1H23

PSV % Co.

31,559

Units

179,670

Land Acquisition

During 2Q23, 16 plots of lands were acquired, with a construction potential of 20,737 units and a PSV of BRL 4.6 billion (BRL 4.1 billion % Company). The average cost of acquisition in the quarter was equivalent to 10% of total PSV, and 84% of the payment shall be made via swaps.

Considering acquisitions in 1H23, the PSV totaled BRL 5.2 billion (BRL 4.6 billion % Company), at an average cost of acquisition of 11% in the period, with 83% of the payment shall be made via swaps.

CASH GENERATION ¹

In 2Q23, there was a cash generation in the amount of BRL 22 million. Thus, in the 1st quarter of 2023, cash generation reached BRL 29 million.

Considering the 12-month period ended in 2Q23 (2Q23 LTM), cash generation totaled BRL 122 million.

Cash Generation by Quarter

Cash Generation by Year

(BRL million)

(BRL million)

98

362

167

146

78

122

53

38

22

8

-17

-6

-71

3Q22

4Q22

1Q23

2Q23

2015

2016

2017

2018

2019

2020

2021

2022

2Q23

LTM

1 - Cash Generation: 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 11 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 July 2023 07:58:04 UTC.