Management Comments

2Q17

EZTEC’s Management announces its consolidated results for the first quarter of 2016 with positive net profits and cash generation. The period has been marked by vacations and prolonged festivities this year, hurting inventory sales. In parallel to the sales efforts, the Company has worked in preparation for the launches for the following quarters, as is already the case for the first launch in April 2017. Net sales have remained positive, cancellations have remained stable, and the Company keeps delivering project constructions under the budget.

SALES AND GROSS MARGIN: gross sales in the end of the quarter were R$114 million, 80% of which refer to ready units. Cancellations have totaled R$105 million in the period, remaining at the same level of magnitude as the previous quarter, culminating in net sales at R$9 million. The gross margin has reached 47.2 in the 2Q17, reflecting the accounting of budget economies in the constructions delivered in March/17. This level of margins, added to the Company’s cash position, allows the Company to grant discounts in a judicious fashion and at the adequate moment, without the need to liquidate the Company’s assets, ultimately allowing for a healthy profitability of its products.

MANAGEMENT OF RECEIVABLES AND CANCELLATIONS: in analyzing the stability in the amount of cancellations incurred in the 2Q17 relative to that of the 4Q17, it is worth highlighting the volume of deliveries scheduled for the year. This has been accompanied by concentrated efforts to convert sales into "transfers" to banks, into the direct acquittance of the debt, and into statutory liens agreements. In that sense, the measures taken include: [i] in the month of February, 2017, the Company officially altered the financing agent for the Cidade Maia project - the main delivery for the year - to the Bank Caixa Econômica Federal, aiming to achieve better conditions for the final client to ultimately transfer their debt; [ii] campaigns offering discounts for those who acquitted the debt using their own resources; [iii] the Company’s payment of the property transfer tax (ITBI) and of the registration for clients who make their transfer to the bank effective within the designated timeline; and [iv] statutory lien, whose total amount (including shared projects) has reached R$311 million by the end of the quarter, rewarding 10% to 12% of interest plus inflation (IGP-DI), which can be subjected to securitization, representing an important credit option that has assisted in the channeling of ready inventory.

FINANCIAL RESULTS: EZTEC has obtained Net Revenues of R$96.5 million in the 2Q17, for a Net Income of R$31.6 million, and Net Margin of 32.7%, justified by the smaller quantity of launches and volume of construction execution in the past quarters. Nonetheless, relative to the 1Q16, administrative expenses have dropped by 9.5%, reflecting the current conjuncture, while commercial expenses exhibit a rise of 6%, demonstrating the eagerness to take up on investments for new launches.

CASH POSITION: The Company has ended the first quarter of 2017 with R$241.3 million in Net Cash, having generated R$30.9 million, reflecting the Company’s active management over the outstanding balance of its clients who already have received their keys, be it through the transfer of the debt to a bank, or through the aquittance directly from the client. This financial position has allowed the Company’s Management to submit and approve an extraordinary dividend distribution in the shareholders’ General Assembly of 04/28/2017 — added to the legally required distribution, it totals R$180,213,662.18, implying R$1.09 per share, the greatest dividend paid by EZTEC, equivalent to a payout of 78.3%.

EZTEC’s Management reaffirm its commitment to its clients and shareholders, fulfilling its role in building and delivering high quality products, with a transparent management, constantly striving to deliver the best results to its investors, adding value to the foundations that have sustained the Company.

3Q17

EZTEC’s Management announces its consolidated results for the second quarter of 2017 with a positive net income of R$280 million. The period has been marked by the sale of Tower B from the EZ Towers project, thus ending the cycle for the Company’s largest commercial project in a positive way. Apart from rewarding shareholders with an excellent financial-economic result, with a gross margin of 47,1% on the sale of Tower B, the EZ Towers project also rendered gains for stakeholders at large, as is the case for the City of São Paulo as a whole, the environment, the acquirers, and the Company and its collaborators, who now can count on two towers with a differentiated architecture and efficient use of its space, located in a corporate center with rising infrastructure. Moreover, the EZ Towers projected EZTEC’s engineering standard to a new level, rendering a technical legacy that will be made use of in the near future in a similar project, adding value to the Company’s business model.

SALES AND CANCELLATIONS: Disregarding the impact of Tower B’s sale, there still was a slight improvement in the quarter’s sales figures prior to cancellations: there were R$164,8 million in gross sales, of which 72% regard ready inventory sales. Cancellations remain at high levels, due to the high volume of deliveries: in the third quarter, there were 3 projects delivered in the City of São Paulo (152 units), or 7 deliveries in the first nine months of the year (1,967 units). For the fourth quarter, there are 4 deliveries scheduled (1,062 units); for the following year, there are only 3 (496 units) - indicating a projected reduction in cancellations over the course of 2018.

LAUNCHES: Regarding new products in the quarter, EZTEC launched the In Deisgn Liberdade project, with a PSV of R$68 million. As a subsequent event, the Company announced in the fourth quarter the launch of Verace Brooklin, a project with R$82 million in PSV. Combined with Legittimo Vila Romana, launched in 2Q17, the three projects are 38% sold altogether. Such sales speed, albeit less than ideal, allows the Company to carry on with the efforts to develop similar projects for the following quarters, aiming at the mid-high and high income segments within the City of São Paulo.

REVENUE AND MARGINS: The Company’s gross margin remains at its historical level at 45.5%, impacted by the delivery of constructions below budgeted costs over the course of 2017, and, in the third quarter, by the alienation of Tower B. It is worth reminding that there is a downward trend in revenue due to the decreasing number of construction sites and due to the few launches carried out in the past years. The lowering revenue levels should impact the Company’s net margins, which should get normalized to the extent that net inventory sales and the number of construction sites rebound to levels that are adequate to the Company’s size.

PORTFOLIO OF RECEIVABLES: The portfolio of receivables from clients financed directly by EZTEC has ended the period at R$347 million, having raised by 8% since the end of the previous quarter. This portfolio is rewarded at an average of 11% plus inflation (IGP-DI), and has been an important tool to promote new ready inventory sales. To the extent that the mortgage rates from financial institutions lower, one can imagine that the speed of the portfolio’s growth is to diminish, be it through a reduction in new units being financed directly, be it through the amortization from current clients.

CASH POSITION AND NEW INVESTMENTS: The Company ended the third quarter of 2017 with a R$834 million Net Cash position, with a cash generation of R$720.1 million, reflecting the payment received from Tower B’s sale. For new investments, there are 3 recently-acquired plots in the City of São Paulo, contributing with addition R$174 million in PSV to its landbank. These plots are in the South Zone of São Paulo, in valuable areas, with a cost surrounding 18% of their estimated PSV. Thus, EZTEC proceeds preparing itself for the sector’s rebound, maintain its high investment-decision criteria, attentive to the best opportunities in the City of São Paulo. Beyond the plots acquired, as a subsequent event, in October, EZTEC has made - as it has been the case yearly - an acquisition of additional participation quotas in projects over which it already had partial control, thus constituting a purchase of inventory, portfolio, and land plot totaling R$127 million is PSV, upon an expenditure of R$56.2 million.

We believe that the signs of macroeconomic recovery - as the lowering base interest rates, the improvement in confidence levels, and the inflation levels in check - allows for an expectation of improved conditions in the sector for the following quarters. It is worth highlighting the Company’s diminishing inventory size, the improving prices in sales in the City of São Paulo, and the lowering mortgage rates offered by the largest private commercial banks. With a comfortable cash position - the product of effective strategic decisions in the past allied by a long-term vision -, the Company remains prepared to create new opportunities, maintaining its commitment to the construction of high quality products, as well as to the delivery of optimal result for its investors, valuing the fundamentals that have sustained the Company through its path.

4Q17

EZTEC’s management announces the results for the fourth quarter of 2017 with a net income of R$25.3 million, thus, concluding the fiscal year with a net income of R$358.8 million, a 56% growth relative to 2016. In the year’s result, despite having faced economic and political difficulties, on top of the risks and dangers inherent to the industry, we highlight the following feats achieved by the Company’s management: [i] the containment of cancellations, which retracted 28% in relation to the previous year, even though the PSV delivered had been 24% larger; [i]; [ii] the consistency in ready inventory sales, made possible by the proactive, direct financing of its clients, making use of the Company’s solid net cash position to counter eventual housing credit restrictions; [iii] the important acquisition of additional stakes in the projects Parque and Bosque Venture, as well as in Jardins do Brasil; [iv] the sales speed observed in the launches carried out in the period - in a weighted average, superior to 40% of the units sold within 2 months from their launch date; [v] the recurring recognition of budget economies in construction, obtained through the efficiency of the Company’s engineering team, culminating in a 44.2% gross margin in the 2017 fiscal year; and [vi] the sale of Tower B from the EZ Towers project - still the largest and most daring project in the Company’s history, having delivered a gross margin of 52.8% - for a sizeable sum of $650.4 million in sales value, net of sales commission.

Nonetheless, for the Company, 2017 also appears to be a critical juncture marking the conclusion of a long real estate development cycle, one that has initiated when the Company first went public. Its IPO was followed by a positive seven-year phase of economic growth - corresponded by constant yearly increases in launched PSV -, having ended in 2013, giving way to a period mark by the accommodation and retraction of economic activities from 2014 to 2016. But it was not up until 2017 that the Company concluded its final deliveries for the projects launched between 2013 and 2014, with a number of units being delivered 90% larger than those scheduled for 2018. This contraction in deliveries originates three important attributes to such transition period: [i] a reduction in the Company’s construction activities, as an effect of the reduced volume of launches in the previous years; [ii] a loosening of the sales strategy for inventory units, with a focus on the reduction of total inventory, composed of R$1.4 billion in VGV, R$1.1 billion of which is fully constructed; and [iii] cash generation, which will translate directly into a renewed investment capacity.

It is worthwhile highlighting that an expressive portion of the cash generated in 2017 has already been distributed via additional dividends of R$566.1 million and, also, allocated in the acquisition of new plots, contributing to the Company’s landbank in the year with the equivalent of R$1.2 billion in potential sales value. On top of the [a] R$6.1 billion landbank, the Company enters the year of 2018 supplied with [b] a total portfolio of receivables of R$842 million (including its stakes on shared projects), out of which R$405 million are under signed fiduciary lien agreements, subjected to rates of 10% to 12%, plus inflations (IGP-DI); and on [c] a gross cash position of R$561.5 million and a net cash position of R$325.8 million. With that said, as the economic activity gradually recuperates, and as the political scenario is readjusted, the Company finds itself with the resources to make integral use of its capacity to generate, launch, and construct new real estate developments from 2018 and on. As a reflection of such diagnosis, for the first time in half a decade, the Company has committed to a launching guidance, stipulated between R$500 million and R$1 billion in launched PSV, which, at its mid-point, represents a 180% growth rate relative to 2017. Concomitant to such launches, there is the possibility to inaugurate the new cycle with the construction of a commercial project intended to reproduce EZ Tower’s success model - a model whose unequivocal merit grants itself continuity through EZ Esther Towers.

In its 10 years as a publicly-traded company, EZTEC prides itself in having presented massive R$3.3 billion in accumulated net income. To serve as parameter, such sum is the equivalent of 125% of EZTEC’s current book value, or 600% the amount gathered in its 2007 IPO. This net income yielded an annualized average ROE of 22.7%, having also permitted an ample R$1.36 billion dividend distribution, or 250% the amount gathered in the IPO. It is worth highlighting that, on top of the already distributed sum, there is a R$85.1 million dividend distribution that must still be added, the minimum distribution relative to the profits earned in 2017, to be submitted to the April 27th Ordinary Shareholders Meeting. Taking the consistent accretion in the Company’s share price into account, as well as the proceeds emitted in the period, one must note that the shareholder who bought EZTEC’s shares at its initial public offering, has since witnessed a yield equivalent to 118% of that from the Brazilian interbank depositary certificate (CDI), a testament to what has been a victorious IPO in the civil construction sector - as well as to a business model designed for consistent and long-lasting value creation.

1Q18

EZTEC’s Management announces its 1Q18 results with positive net income and cash generation. In the period, the company presented continuity in the operational acceleration, with reheating gross sales, led by vigorous sales from launches, and consistently diminishing cancellations. The context of the quarter is that of a transition, as the Company digests the conclusion of a long operational cycle - with the resolution of 2017’s latest deliveries and the monetization of the remaining ready inventory -, and as it prepares the foundations for the beginning of a new cycle, driven by financial robustness, acquisitive breath, a plentiful and versatile landbank, as well as iconic projects that can foster an escalation in launches.

LAUNCHES: Having emitted a guidance to the market by the end of 2017, EZTEC has committed to a volume of launches within R$500 million and R$1 billion for the year of 2018. Already in 1Q18, it has carried out the first launch with Z.Cotovia, a residential project in Moema, South Zone of São Paulo, with a PSV of R$105 million. While it reaffirms its commitment to the guidance, it is worth remarking that the profile for launches remains being a conservative one, directed towards the mid-high and high-income segments, well position within the City of São Paulo, as well as opportunistic incursions into Minha Casa Minha Vida. Differently from the middle-income segment and from further away regions, the abovementioned profile has shown to be more resilient to unemployment, the latest macroeconomic variable to recover. Still on the matter of profiling demand, considering the sales for the most recent launches, it could be noticed that that investors have returned to the real estate market, motivated, primarily, by the diminishing profitability for financial appliances, inciting a renewed interest for equity acquisitions; additionally, due to the perception that the price evolution in the City of São Paulo has already surpassed its inflection point, allowing an upside through leasing or future resales. Such positive sales performance sustains the intention to escalate launches that underlies the emission of the guidance. With that put, EZTEC relies on a flexible, as well as robust landbank, replenished by the latest plot acquisitions over the course of the past 18 months: they fit into the abovementioned conservative profile and counts with a short- to mid-term perspective to be launched. Complementarily, the Company can make use of other resources to enhance the operational volume - and, hence, revenues -, as is the case of additional share acquisitions in projects where EZTEC is already a part of, or even the acquisition of a whole project that is already approved, and yet to be launched.

DELIVERIES AND CANCELLATIONS:: In 1Q18 the Company delivered the first project of the year, Massimo Vila Carrão - mid-high standard, 42% sold and with a PSV of R$53 million -, a project that inaugurates a vintage of deliveries that diverges from that which was carried out in 2017. In comparison, from a quantitative perspective, the PSV delivered over the course of 2017 reached R$1.4 billion, against R$233 million for the 2018 foreseen deliveries. Having in mind the noticeable correlation between deliveries and cancellations, the smaller volume delivered suggests that the matter of dissolutions tends to be less onerous for the Company’s year. Nonetheless, it is important to safeguard that, naturally, there is six-month lag between a project’s delivery and the incidence of potential cancellations from it. As a consequence, the Company, in 1H18, still goes through the residues from the cancellations that arise from 2017’s latest deliveries, despite there already being a consolidated downward trajectory for cancellations.

MANAGEMENT OF INVENTORY AND RECEIVABLES: Given that the last two years’ deliveries were the ones most susceptible to cancellations, it is precisely on the regions where those happened that the Company currently holds the preponderant portion of its inventory: it is the case of Guarulhos, Osasco, and the West Zone, which carry, respectively, 45%, 11%, and 10% of its ready residential inventory. As the 2017 delivery cycle has been concluded, by the first half of 2018, there is a flexibilization on the ready inventory commercial strategy, which is in conditions set for an acceleration in sales. A tool that has been effective in channeling the ready inventory are statutory lien agreements - the financing from EZTEC directly to its clients. First, because it allows for the utilization of the Company’s robust cash position in a way that intervenes for clients that, despite their purchasing power, may not fit into the formalities inherent to banks’ credit approval criteria - a common case, for example, among liberal professionals. Additionally, it is a means of financing that is less bureaucratic than that of transferring clients’ debt to banks, allowing them to have their keys in hand months prior to what they would otherwise. The shortening of this time length causes a reduction in the rate of sales withdrawal that takes place before clients move into their new homes; also, it stimulates the real estate brokers, who can rely on receiving their brokerage fees more quickly. Not only do statutory lien agreements corroborate with the acceleration in ready inventory sales, but it also has an attractive profitability, as new financing agreements are subject to rates of 10% plus inflation (IGP-DI). The portfolio of direct receivables has evolved from R$150 million, by the end of 2015, to R$442 million currently, having a strategic role in the digestion of the recently delivered inventory.

REVENUES AND PROFITABILITY: The net revenue and gross margin for the quarter, reported at R$90 million and 35%, must be interpreted at the light of the following three factors: [i] the declining impact of cancellations, which, having subtracted R$65 million from net revenues, also weights on gross margins: this is because the cancellations in matter are derived from sales with original gross margins superior to 50%, pertinent to a booming market context. Still on the matter of gross margin, [ii] the difference in the structural standard of profitability that was accrued in the projects launched up to 2014, against the potential profitability of the more conservative projects launched up to 2017. Given that predominant launching profile during the boom market consisted of large residential compounds in São Paulo’s metropolitan region, their profitability was enhanced, on the one side, by less expensive plot acquisitions, and, on the other hand, by the capacity to extract significant economies of scale. That profile can be juxtaposed to the constructions from the last three year’s launches, which usually consist of single residential towers. The latter not only suffered pressured from stagnant prices in the period, but they also require a simpler level of engineering that does not allow for the full manifestation of EZTEC’s competitive advantages. Regardless, it is worth highlighting that maintenance of differentiated gross margin levels, vastly exceeding the sector’s average. Besides, there still is the full capacity to restore past profitability standards, as a more vigorous launching scenario gives way to projects with superior profitability potential. The moment of the cycle also presents relevant implications - as well as temporary ones - for revenues: [iii] the Company’s capacity to generate revenue is restrained by the gap of launches that took place in the past three years, since, once their construction is completed, their differed revenue recognition is drained. Even in a context of escalating launches and sales, the revenues to be originated in these initial sales get diluted over the course of the entire construction period, generating a valley in the Company’s revenue recognition. To overcome such valley, for now, the Company depends predominantly in the ready inventory sales performance, whose revenue recognition is immediate. EZTEC should restore a revenue critical mass as launches accumulate, generating revenue to recognized over the course of the evolution in constructions.

CASH POSITION: The Company has generated R$60.8 million in cash, thus reaching a net cash position of R$386,7 million. The continuous cash generation that EZTEC experiences also reflects the conjuncture it is in: the unexpressive launches for past years make it such that the Company have lean construction obligations. Ready inventory sales are also a robust source of cash generation, albeit attenuated by the abovementioned high incidence of direct financing. It is worth reminding that part of the generation relative to this phase of the cycle has already been distributed over the course of the last fiscal year - in 2017, R$620,768,422.79 million were distributed, representing 24,2% of the year’s net equity. In a recent Shareholders Meeting, there was the approval of the further distribution of R$85.221.679,14 - the mandatory minimum distribution relative to 2017’s net income and, hence, to the profits accrued in the sale of EZ Tower B.

SUBSEQUENT EVENT: EZTEC’s cash position has allowed it to carry out, as subsequent events, two attractive acquisitions already in the second quarter: [i] the 5% additional stakes in the megaproject Jardins do Brasil, thus reaching 46,25% participation over it. Considering that the project consists of five launched phases, four concluded ones, and another still to be launched, such acquisition contributes with an additional stake on inventory and portfolio of receivables that corresponds to an increment of R$24 million in launched PSV, as well as another R$19 million addition relative to the phase still to be launched. Ever since 2012, EZTEC has recurringly acquired additional stake in projects where it already is a part in, driven by the fact that it has a safe, and easily measurable profitability: the Company was the one to carry out their construction and it also manages their portfolio of receivables, and it therefore can properly price risk and rewards. Yet, the most noticeable project to be mentioned, still as a subsequent event, is [ii] the approval of the R$90 million purchase of residential project of Parque da Cidade, from OR Empreendimentos e Participações, to be paid in installments. The acquisition - still subject to a due diligence cancellation clause - consists of an already approved project composed of two high standard residential towers. Located in Chácara Santo Antônio, an important financial and business center, the project neighbors the EZ Towers, as well as the plot where the EZ Esther Towers are to be erected - the most important projects ever conceived by the Company. It is, therefore, a region in which EZTEC has vast familiarity and security, where it has also once constructed Capital Corporate Offices and NeoCorporate Offices, pioneer commercial projects in the Company’s history. The company inherits from the region the expertise accrued over these projects - and expertise that has been recently crowned by the Dubai Prix d’Excellence Award, thanks to EZ Towers A real estate excellence -, and gives back to the region an economic and architectural legacy visible to all.

The Company’s Management reaffirms its commitment to clients and shareholders, striving for the best opportunities to preserve capital and generate value. As it develops a new operational cycle - guided by the delivery of high quality products and transparent management - the Company seeks to correspond to its investors trust, returning to revenue generation and profitability levels compatible to its stature and history.

EZTEC’s Management.