Good morning, ladies and gentlemen. Welcome to the earnings call for Cyrela Brazil Realty S.A. regarding the earnings for 3Q 2022. Today we have with us Mr. Raphael Horn, Co-CEO, and Iuri Zanutto de Jesus Campos, Senior Manager for Investor Relations. We would like to inform you that this presentation is being recorded and simultaneously translated. The translation is available by clicking on the button Interpretation. For those who are listening to English, you may choose to click on Mute Original Audio. Additionally, for those who wish to have access to the presentation in English, it is available on the company's investor relations website at ri.cyrela.com.br. During company presentation, all participants will not be able to open your mics. Next, we will begin the Q&A session. To ask a question, click on the Q&A icon, type in your name and company.
When announced, we will request you to unmute your mic, and then you can do so to ask your questions. We would like to clarify that any potential statements made during this call relating to the business perspectives of Cyrela, operating goals or financial goals are company management forecasts that may or may not occur. Investors must understand that any political, macroeconomic factors or other operating factors may affect the future of the company and lead to results that materially differ from those expressed in such future considerations. To begin the 3Q 2022 earnings call, I'd like to hand over to Mr. Raphael Horn, CEO, who will begin the presentation. Mr. Horn, you may begin. In this quarter, 14 projects were launched with a potential PSV BRL 3 billion totaling BRL 6.3 billion in the year to date of 2022.
Net sales were BRL 2.3 billion, an increase of 41% quarter-over-quarter. That's why the company achieved BRL 5.2 billion in sales in the year, a 32% increase compared to 2021. In addition to those operating values informed, we have BRL 1.6 billion in the quarter with 33.9% gross margin, showing a certain recovery when compared to the previous quarter. Lastly, the company had net income of BRL 239 million in the quarter and BRL 609 million for the first nine months. Moving forward, we await new signs from the newly elected government. We are rooting for the announced tax responsibility, fiscal responsibility as one of the main aspects of their government. Now let's talk about our operating results. Thank you, Rafa. Good morning, everyone.
First of all, on slide five, we'll talk about the quarter launches. In the third quarter, we launched 14 new projects, as Raphael mentioned, PSV of BRL 6.292 million, 26% higher than the second quarter of 2022. The share of the company in these launches was 73%. If we exclude the swaps and consider that in the percentage, the volume launch was BRL 2.3 billion. On slide six, we would like to highlight the launch for the quarter was the Oscar Freire 1560, a project on the Oscar Freire Street on the Pinheiros neighborhood side. It's beautiful. On slide seven, the sales performance for the quarter, contracted sales, BRL 2.2 billion, an increase of 67% quarter-over-quarter.
If we exclude the swaps, BRL 1.713 billion in sales in the Cyrela percentage. The state of São Paulo was responsible for most of the sales at 69%. Slide eight, sales speed. The SOS for the quarter was 44.3%. When we look at the sales speed of the launches in that quarter, the launch projects are at 41% sold up to the end of September. Slide nine, total inventory. End of quarter, the market value was BRL 8.911 billion at 10% increase quarter-over-quarter as a result of the previous launches. Here we can see the quarter-over-quarter differences. On slide ten, the concluded inventory. We've sold 7% in the beginning of the period.
When we add the projects delivered and pricing of units, we have 19.6% compared to the previous quarter. Last operating slide number eleven. The units delivered. Cyrela delivered 21 projects this quarter in 4,289 units and a PSV of BRL 1.7 million. In year to date, 7,935 units, 40 projects with a total PSV of BRL 3.2 million. Moving on to the financial results. The net revenues were BRL 1,250 million. 21% higher than 3Q 2021 and 24% higher than 3Q 2022. In year to date, a little over four million. 16% higher than nine months 2021. We have the gross margin of 6.3% and 34.7% in the same quarter of 2021.
32.2, the gross margin a bit lower than 35.3%, which was the nine months 2021 figure. Finally, net income, 289 million BRL compared to 238 million BRL in 3Q 2021. In year to date, 601 million BRL net income. On slide 14 about the profitability. Our return on equity, average equity was 12.7%. On slide 15, indebtedness. Gross debt was BRL 4.2 million with gross cash position of BRL 3.9 million. The net debt achieved 2.61 million BRL. The total gross debt, 75% is long-term. In terms of leverage, our net indebtedness compared to net equity was 3.5%, 1.9 percentage points lower than the previous quarter.
The low level of indebtedness ratifies the principle of financial solidity of Cyrela and enables us to maximize return for our investors. Last slide before Q&A, cash generation. In 3Q 2022, we had cash generation of BRL 188 million compared to a cash burn of BRL 48 million in the previous quarter and cash generation of BRL 177 million in the same quarter of 3Q 2021. Recurring events, BRL 133 million. It's in this slide. That was the sale of the Cury shares. We've accumulated BRL 87 million. Now we'll move on to the Q&A session. Thank you, everyone. Thank you. Now we will begin the Q&A session. To ask a question, click on the Q&A icon and type in your name and company name. When announced, you'll see a pop-up to unmute your mic.
Please do so to ask your question. Please hold while we collect questions. Our first question is from André Mazini from Citi. Mr. Mazini, go ahead. Good morning, Raphael and Iuri. Thank you for the presentation, and thank you for taking my question. I have two on my side. The first one is about low income. I've seen that your launches in the program lowered a lot, actually almost half compared to the same period last year. Your exposure is mainly through JVs who grew their volume in that period, maybe to offset the reduction in your launches. I'd like to understand how you balance that out about what you launch in your own program and the exposure that you have through the JVs.
If you can give us some flavor on the strategy for that segment, what you expect that should be in the future and the demands on that. Second, subsequent events that you have in the release about selling the Cury shares. I know it's hard for you to open up your strategy in terms of that, but I'd like to know how you assess the investments in Cury and other companies such as Plano & Plano and Lavvi, and if you're considering divesting in your other shares. Hi, good morning. About your first question about our share in low income, if we're blending that with our partners, with our joint ventures. The answer is no, we don't do that. Our partners, our joint ventures, they're independent.
They decide on the volume that they want, and we don't take that into consideration when we forecast what we're going to do for the year. We don't really have targets for PSV or buying land. We buy. I always like to say that we buy what we like. This year, we launched less MCMV program because we had less profitable land compared to last year. This is mainly a result or a consequence. It's not something that's really planned. That's just what happened. We believe that the segment is still okay. It'll continue to be okay, but you have to be prepared for that. Nothing new in that sense. About Cury, we sold a small share. I would say that we were, like, recycling a little bit of capital, generating a bit of cash.
Obviously, it was very profitable for us. That was a very small share. We're still a very relevant partner there in the company. Nothing really changes. It's just capital recycling. I'd call it that. The other partners, once again, we've mentioned this a lot. We don't see leaving a relevant participation behind and controlling shareholders. At least I can't see after ten years from now, but we don't see us leaving these companies. We like them a lot. We admire them. We will remain. Sometimes every now and then, we like to recycle a little bit of capital, but not really going into a structural condition. Okay, great. Thank you. Our next question is from Fanny Oreng from Santander. Good morning, Raphael. Good morning, Iuri. Thank you for taking my question. I have two.
First of all, I'd like you to comment about levels of revenue recognition for the upcoming quarters. You mentioned you had some specific projects that helped potentially in recognition, but also gross margin. I'd like to know what is your outlook for revenue recognition and gross margin for the upcoming quarters? Thank you. Hi, Fanny. Thank you for your question. Really hard to determine a specific value or amount. You really know that. Most of our top line's already been contracted, which is the backlog that we recognize in the upcoming quarters, together with the ongoing works. The other points are less predictable, such as new inventory sales, recognizing launches, swaps, and so on. It really depends on the mix of those sales and the launches each quarter.
In this specific quarter, we had one or two specific one-off launches that really brought up the top line, as you mentioned yourself. Really hard to say what the path will be like. I believe that we won't have much of a variation in upcoming quarters, upwards or downwards. Obviously, one quarter will be up, another will be down, but not major ups and downs. I'd say that level is pretty similar to what the upcoming quarters will be like. For gross margin, I think the discourse is the same. It depends on the components that are more volatile. New inventory sales, inventory mix, new launches. In this quarter, same thing. Maybe one or another big launch well sold with a higher margin that helped. We didn't really have an impact of construction.
In the first and second quarter, we did, and we mentioned that. That also helped the margin this quarter. Going forward, we don't have anything relevant mapped out. If we don't have any other excess expenditures, the margin will improve, but we can't state that decisively. Thank you, Iuri. Next question is from Ygor Altero from XP. Ygor, please ask your question. Hi, everyone. Good morning. Thank you for taking my question. The first one, a follow-up about Cury. The sale of shares, does that translate into dividends as you're in a comfortable position in terms of indebtedness, no leverage? What's your mindset in launches, the outlook for 2023, as in 2022, you're able to launch a lot. What are you thinking in terms of operation size? Thank you. Hi, Ygor. About dividends.
Our dividend or exposure is low today. It will grow, though. In the next two years, it will increase because we grew a lot. We've grown a lot in these past years, so that's natural to have a cash burn. You'll see leverage increasing in the upcoming two years. I wouldn't expect major dividends. You know that we like to pay dividends. We paid a lot of dividends for many years, but in an expansion cycle, it's harder to do that, unfortunately. I wouldn't expect much dividends in addition to the minimum mandatory dividends because our leverage will grow. After that stabilizes and things go back to normal, that's when we like to pay dividends. About the 2023 outlook without giving you guidance, as Iuri mentioned.
In general terms, it should be similar to this year, but we don't really have, though, a commitment to targets and volume. We have a good pipeline for next year, but obviously the market's still uncertain, the economy is uncertain, the interest's uncertain. New administration is coming. A lot of things for us to discover. We hope that the elected government will have fiscal responsibility, and we hope it's gonna be a good year. A lot of things still have to happen, and we're rooting for those good things. It's year after year, and we don't really have that much visibility about 2023 concerning the market, the economy, interest, and tax. Let's wait and see how things will unfold. Okay, great, Rafa. Thank you. Thank you, Yuri. Our next question is from Bruno Mendonça from Bradesco.
Bruno, go ahead and ask your question. Hi, everyone. Hi, Raphael. Hi, Iuri. Good morning. Thank you for taking my questions. I have two questions. You did a mark to market in the Plano & Plano investment, so I'd like to hear your motivation for that to see what happened. It was mark to market according to the IPO price, so I'd like to know what changed. That's my first question. Second one is about cash. We've seen a growth in the portfolio, and it's still growing fast. What's the outlook for the business? You also issued debentures in CashMe. It wasn't created with subordination. It seems to me like it was a simple debenture. Could you give us some information of that?
At the end of the day, is it Cyrela corporate debt, or is CashMe being able to fund on its own according to that type of framework? That's it. Thank you. Yuri is gonna talk about Plano & Plano, and then I'll talk about Cash. Thank you, Bruno, for your question. Pretty much in that line that you mentioned, it was mark to market according to the IPO. That was two years ago, back then. So it wasn't mark to book. So there's a difference between the final value and how it's booked, our share in that. So that premium, so to speak, has to be tested once a year to see if that's right. We did that last year. We did that again this quarter. It's based on the discounted cash flow according to company assumptions. About the assumptions, the market became worse for everyone.
It's been a year now, especially low-income companies in terms of gross margin and predictability of launches. Based on the discounted cash flow, we had to adjust that. Even though it's a small one, we still had to do it. Bruno, about CashMe. We should achieve 90% of the target this year. Asset origination. Yeah, we did a little in the third quarter. It's within expectations and within the targets. It's gonna be a good year for CashMe. About the debenture issuance. CashMe already has BRL 1.6-1.7 billion in the portfolio. The market is open. We did one with Itaú, and we've closed that with other players to do a next CRI. Then we do one debenture here, another debenture there for bigger structured operations that we have. The CRI market and the CashMe market is based on CRIs.
If the market continues to operate, nothing changes. It's just a one-off debenture that we have. We kinda have some blend in that and bigger operations that we don't always get into the CRI. Yeah, the big thing is the CRIs. Great. Thank you, Rafael and Yuri. Next question is from Elvis Credendio from BTG Pactual. Elvis, you can ask your question. Good morning, Rafael and Yuri. Two questions on my side. First is the Eden Park. Given the magnitude of that, can you give us more details about the launch schedule and other phases now in 2023? Should everything be done in 2023? How are the sales going for the first phase? What do you see in margin for that project? And the negotiations to sell the Multifamily Tower BIB. That should be fourth quarter.
I want, like, an update in construction costs. Are there any inputs that are still concerning you or any inputs that you're getting some savings on that? What's the expected forecast inflation? Are you adding some more margin onto that or not? That's it. Thank you. Hi, Elvis. About Eden. It's a project that we really like. We should launch only one tower this year, beginning of next year, second tower, and then depending on market appetite, we'll launch more next year. Expectations are pretty good. We believe it's a very unique product. It's hard to have that type of land nowadays, and it was approved in the previous directives. We're really excited. We've been celebrating. The brokers are very excited. Well, we're just very excited. Let's see. We hope it works. It's a big project.
If it works, there's a lot to sell, but obviously, it depends on the demand and market speed. It is a project that we love. About the gross margin of the project. It's a good margin. I don't know it right off the bat. About construction costs. Yuri will answer that. Thank you, Rafa. Thank you, Elvis, for the question. Gross margin of that project specifically, we don't usually give gross margin per project, unfortunately. Sorry. About construction costs. In the past three or four readings of the INCC came close to zero. That's good news. Even though had two years where construction costs were going up nonstop. We've even seen some inputs dropping in price, so a negative price variation.
On the other hand, there's another input that's not new, and I've heard you asking about this in other earnings calls last week and this week, which are the byproducts of cement and concrete. There have been some highs, one after the other, but in net-net, one offsets the other. Our construction costs are pretty much under control in the past quarters, even having stabilized a little on the upside, but it's news that we're very happy with. Oh, you asked about inflation. Well, same thing with gross margin. We don't give guidance on that type of internal figure. We didn't make any significant changes to our assumptions in the past times. We assess it constantly to see if we should adjust upwards or downwards, but it wasn't the case recently. Okay, Iuri, Rafael, thank you. Next question is from Marcelo Motta from JPMorgan.
Marcelo, you can ask your question. Good morning. I have two questions mainly related to inventory. I'd like to understand your mindset to sell concluded inventory because when we look at the figures quarter after quarter, the last two are a bit shyer given the level of concluded and the other sales expenses. Are you gonna need more marketing to sell? And I'd like to know how that can affect the margin dynamics as well. Thank you. Hi, Mota. Thank you for your question. To answer your question. We assess inventory if it's concluded or not on a case-by-case basis. We have monthly and biweekly meetings. We're always paying attention to inventory, and each one has a different strategy. If we have to give a discount, we'll give a one-off discount, but it's not the general rule. There's a specific solution for each case.
I really don't see that as an issue for the company. What I have seen, though, not only in our bottom line and also the results that I saw for the competition last week and this week, is that there may have been. They've been having a bigger sales effort, so be it whichever it is, media, advertising, nothing really relevant. But I have seen sort of a pattern going on. I would guess that it's a pattern for the industry. We need to put in a little bit more effort to finalize a sale. I think that's normal given that the scenario is worse in the past 18, 11, 24 months even. That's it. Anything missing? No, very clear. Thank you, Iuri. Next question is from Hugo Grassi from Citi. Hugo, you can ask your question. Or excuse me, gentlemen, good morning.
Thank you for taking my question. The first one is about the loss provision of BRL 68 million in terms of related parties from Precon Engenharia. Apparently, there was an agreement that you had with Precon and there's CADE involved, the Brazilian Antitrust Agency. A second question about credit. This week we had disappointing news, especially coming from Bradesco in deterioration, worsening of default. I know it's hard to predict 2023, but if you can talk about today, how do you see the credit appetite in banks? How is that evolving? Thank you. Hi, Hugo. Good morning. Thank you for the question. About Precon. That's a partnership that we have. It's a company that operates outside São Paulo. We've had that partnership for a while. That's public knowledge.
The information that you're talking about, the Brazilian Antitrust Agency, the CADE, it has nothing to do with the provision that we had to the bottom line. Some news had come out before that about CADE. It's a public partnership. It's public knowledge. That's in the special purpose vehicles that we have with them. That's disclosed. That's not new. We have that partnership. We have some credit receivables from them and instruments such as mutuals. We assessed how to recover those amounts, the receivables. You can see the variation in explanatory note number 13, related parties, credits receivable. They would pay us through the operation. Operations didn't go as expected, so we analyzed the recoverability of those credits, of those assets. We also considered the collateral that we had and so on.
We reached a conclusion that the recoverability was lower. We did that provision. You can clearly see if you consider the ITR of June 2022 compared to September 2022, you'll see it's lower. The amount is lower than we have there. In the income statement in the release. About the real estate market, maybe Rafael wants to comment, but I think it's early to talk about Bradesco's results in the real estate credit market because the result was the day before yesterday, right? Yeah, but I can answer that. I think it's different. They're different things. I don't follow the listed banks, but there's collateralized credit and non-collateralized credit. The problem is much more with collateralized. I believe that banks are still have a strong appetite for real estate. That's what banks love the most.
When you have clients and even with the SFH, it makes a lot of sense for banks. They really like the line. Because we've been selling houses for a long time, so we don't believe there's gonna be a structural change relating to that. I think that's here to stay. Having clients to finance their real estate. We believe that their appetite is strong, and it will remain that way. Okay. Thank you. Very clear. Thank you, Hugo. Next question is from Rafael Rehder from Safra. Rafael, you can ask your question. Good morning, everyone. Thank you for the presentation. On my side, I have two questions as well. First one is I'd like to know more about the price scenario. With an expressive volume of launches in the past years, do you believe that there could be a price increase?
'Cause I'd like to know your strategy when you're gonna do a new launch. If you prefer to leave more money at the table or try to sell everything until you deliver it, or deliver it with 10% inventory ready and work on price and gain more margin. The second one, I have had a technical issue. Maybe you already talked about this, but tell us about the sales in October. I know you had two less weekends because of the elections, so maybe people didn't visit the sales stands. I'd like to know if that's back to normal now. Hello. About price. I think they've stabilized. They went up a lot with the corona phenomenon. Now they're stable. I don't see major price increases in an objective way or concrete way in a short period of time.
Obviously, if the economy improves, then that might change. We see stable prices. We don't see room for it growing. You said if we like to leave money on the table. No, the answer is no, we do not do that. We like to sell at the optimum level and deliver 10% of inventory. That's not that precise. That's not how it works. We're always trying to look for the best price possible and try to deliver it completely sold. We don't like ready inventory that's concluded, all right? That's ready. We want price, and we want margin. It's a daily effort. That's what we do. We try to maximize price. Yes, the math is harder because prices are stable now. The INCC went up a lot in the past years, so we have to put in more effort to maintain the margin.
It used to be easier. Now it's a bit harder, a bit tighter, but that is the reality. We have to work with that reality. We don't see much room. The other thing is, Rafael, is how much PSV will drop. It has been dropping, and that's the big discussion, right? That's a bit tighter, I'd say. Let's wait and see. Economy solves everything, interest rate solves everything. Let's see how things will move. We're also ready for more challenging scenarios. That's what Brazil is all about. You know that. It's normal. Thank you. How about sales in October of the elections? Oh, sorry about that. September and October were kind of months, I'd say. Wasn't a big deal, obviously. Obviously, the election got in the way.
About the election, about if it's, if it's the pre-election, if it's the economic scenario, or if it's the World Cup, we don't know. Once again, the months weren't that good. We're not sure if it's the election's fault. I hope it is. Like I said, a lot of things have to happen, will happen, and like I said, we're ready for any scenario. We're really excited with Eden. We had good launches. Okay, the harder it gets, the more we're gonna have to work, and we have to be ready for that. It's no use giving an answer. You know, we have to make things work in any scenario. We expect something really good with Eden, and we hope that the market is still that we continue to be successful in this market. Very clear. Thank you, everyone. Good morning. Good day.
Next question is from Jorel Guilloty from Goldman Sachs. Jorel, you can ask your question. Good morning, everyone. I have two questions here. First one is about cash generation. When we take away the Cury sales, it was good. Basically BRL 5 million in cash and much better than what we were seeing in the second and third quarter. I'd like to understand about what you're thinking in cash generation for the future. What led to that break even, so to speak, for that quarter, this quarter? Is it something that we can see in the future if it will continue? The other is about land bank. You have BRL 7-8 billion in São Paulo. São Paulo has been your focus. I'd like to understand when will you be buying new land, or should we expect that soon?
Are you taking it slow because of the market or available inventory? I'd like to understand what we should consider and think about how you're working with your land bank. Thank you. Hi, Jorel Guilloty. Thank you for your question. About cash generation, we try to balance that out always, right? We have to balance that out with sales of inventory. There's a lot of planning behind that. We have seen the receivables of listed companies in the quarter. That also helped to speed up cash generation and the variation of net debt. Going forward, I think we're gonna have a very challenging year next year, which is normal given the cycle that the company is going through. It's been two years or even more than two years that we've been launching at higher PSV levels in absolute terms, BRL 6 billion, BRL 7 billion.
It's natural to have a lot of working capital to burn. We have cash flow meetings almost every week, and we always try to balance that out with new sales and so on. Without giving you guidance, we believe that we should have a challenging year for cash generation next year, very similar to this year, in fact. About the land bank, Rafael ran to that. For 2023, we already have land bank. About how much we're going to buy for 2024 and 2025 are things that we don't really know yet. That's something that's very dynamic. It depends on opportunities or scenarios. There's a lot of uncertainty. We wanna look a little more to see what's gonna happen with the new government and see how the economy is going to unfold. What we know is we have land for 2023. It's our just-in-time work.
We have to have it. 2024 and 2025, we have time to get ready. If we're gonna grow or not and decrease risk, that's one of the things that we like to try to understand, at least the economic scenario first, to be more or less aggressive. A lot of things to come. We have 2023, and then launches, new launches depend on market demand and so on. Thank you. To ask a question, click on the Q&A icon and type in your name and company. When announced, you will see a pop-up to unmute, and then you can ask your question. Please hold while we collect all the questions. To ask a question, click on the Q&A button and type in your name and company. When announced, a pop-up will show to unmute your mic. Then you can unmute and ask your question.
Please hold while we collect questions. The Q&A session is now over. I would like to hand over to Mr. Horn for his final comments. Thank you everyone for your attention. This scenario is tougher, as you know. So far, we've been able to work around that. We hope it doesn't get worse. We're really rooting for a good government, for a good administration of our new president. Hope that he's fiscally responsible and that we have four years of a good economy. We're analyzing, expecting, hoping, and working hard. We'll see you at our next earnings call. Thank you. The Cyrela earnings call is now over. If you have any questions, please send your question to the IR team by email, ri@cyrela.com.br. Thank you for participating. Have a good day.