Welcome to the earnings release first quarter 2022. My name is Paulo, IR at Direcional. Together with me is Ricardo Ribeiro, our CEO, Henrique Paim, our CFO, and André from the IR team. Before beginning, some notices. This event is being recorded. The replay will be after the closing of this earnings release. We will have an initial presentation where we will show you the main highlights of the first quarter, and then we will begin with questions and answer. As usual, please use the Raise Hand feature here below, and we will open your mics according to the order of the questions. Thank you very much. Have a very good event. Now I give the floor to Ricardo.
Good morning. It's a pleasure to be here and talk to you once again. One more earnings release. I would like to begin with our highlights, page three. Perhaps it's one of the most important parts of our conversation here. In our point of view, this was the continuity of the evolutions of our operations has become clearer in our vision. Here, this was continuity, what we have been doing.
Although this is a quarter seasonally where we have a lower volume of sales because of holidays and all the rest, this was the best first quarter in our history when we considered the development segment of the company. Highlights. Here to the left, you can see the expressive growth of launches that we had in the first quarters of the last years in Direcional. This was the best first quarter that we had in the last years in the history of the company when we considered the level 1 operations that we had between 2009 to 2015, 2016.
To the right, also very clear, we have the growth of sales where we went from in the first quarter from a level lower than BRL 300 million to more than BRL 600 million in the first quarter of 2022. In 2 years, we literally doubled our sales volumes in the first quarter. This is very expressive, 100% growth when we compare the first quarter 2020 to the first quarter 2022. Also, I would like to use this moment, we're talking about sales, to stress that March was the best month of sales in the history of Direcional, and April the second. We've noticed huge resiliency with regards to demand of our product. The second quarter, we believe that the maintenance of this demand has proved to be strong and very satisfactory here.
Here to the left, this has certainly been mentioned a lot in the last year and a half. Most talks with investors and shareholders in the market in general. Once again, I'd like to stress the resiliency of our gross margin. You can see that the gross margin has been constant at 36%, 38%, except the second quarter 2020. It was the first quarter of the pandemic. It was a delicate moment. Nobody knew what would come before would come in the future. But when we see the third quarter on, we see very solid gross margin without variation. We have tried to show the market that vision when we approve a launch, the committees here in the company, we should work with gross margin between 33%, 34% considering the mix, Direcional mix, Direcional Riva mix.
And we've been able to operate with gross margins above this level, which is a trigger. This is where we approve the launch of a product. Our operations have been very successful here. Maintenance of margins. We've had the repricing policy of our product, which has been approved in a very progressive way. Here we have the repricing of our products with almost undetermined periodicity, and we have maintained speed of sales and have been able to work with the best pricing possible for our product. Also, I'd like to highlight the work we've done in our engineerings and projects and supplies procurement areas. We have been very assertive, anticipated the procurement of certain products when we noticed that this could be an opportunity. Obviously, capital is more expensive. When you have more inventory, you have the costs of that inventory.
But it has made sense to anticipate the acquisition of certain products, and this has become very clear with the resiliency of our margins. Also, we have used our project area, so as to continue with this journey that we've had in the last years focused on productivity gains. There is no doubt that it's with productivity that we are going to be able, in time, be able to offset this cost increase that we had, specifically parting from mid-2021. Also, we have implemented recurring changes with our products. This has allowed us to better price them, to better continue serving the target public, which is the best opportunity in the current market moment, but maintaining very healthy, very solid gross margins.
All these factors has allowed us to operate with solid margins and gave us huge comfort here, and we are going to be able to continue operating above this trigger that we believe is the minimum gross margin when we approve a launch. This next issue, portrayed in the bottom right moment, I would like to use some moment because it's so important here with you. First, what I would like to say here with regards to this slide is the huge operational leverage gain we've had. This quarter, the net revenue of Direcional grew 13% compared to the first quarter last year. Our net profit rose 33%. When you analyze the gross profit before the minority interest left our products, this growth was 50%. So 13% growth of revenue. We consolidated minority interest. We had a growth considering the participation of minorities. Interest was 50%.
I had stressed this in the last calls. This is a trend that should continue. Expressive leverage gains, where any possible reduction in gross margin, which is a reality that several companies have had to face. It's not different here, right? But we have managed to deal with this scenario very well. Even with a perspective of gradual convergence, our gross margin, the level's closer to 34%, we have growth of our operations, sales, revenue, and backlog margin. Our future exercise results have complete conditions of being able to offset this gross margin reduction. So I really would like to stress this with you. We are going to be able to deal with this. Also, another important point that I would like to emphasize here with these three bars to the right of this slide, where we analyze the minority interest in our numbers.
When we look at the net profit, for Direcional now was BRL 36 million. When we adjusted the swap that we have in the company, and also because of the acknowledge of a loss that we had when we brought this value to the present value, the net here was BRL 36 million. Minority interest, BRL 19 million. Minority represented 35% of the total net profit before minority of the company. When we look what we should see before us in the future, we have in our future revenues, 12% minority interest, available inventory for sale today, 8%, and launch of the first quarter, 7%. When we look to the future, most probably, as well as the possibility of having gains in operational leverage where we have grown our revenue over expenses, we will have one more effect where the minority interest will have a lower share.
This can be another trigger for the positive effect of the net profit of the company. Another point that I want to stress, if you analyze the margin of future results, we had in the first quarter this year, a growth of 0.2% when compared to the fourth Q last year. We have been able to implement a repricing policy of our product that has given us huge comfort relative to the resilience of our gross margin. With regards to our backlog margin, I would like to stress that in the last 12 months, the revenues to receive of our results grew 38%. That is, in the first quarter last year, we had BRL 671 million expected, and we closed the first quarter this year with BRL 938 million. In general, in Brazil, the first quarter is a rainy season.
In most regions, we do not begin works in the first quarter here in Direcional. There is a perspective, a positive perspective, that now with the beginning of the work starting from the second quarter when the rainy season ends, we will have an important growth in revenue from mainly this expressive growth of backlog margin that we had in last year. Also, this visibility that we're having, the resilience, a strong demand for our products too. Lastly, I would like to address an adjustment that was done in the subsidies curve of the Casa Verde e Amarela program entered 12 April for families with income of BRL 2,000 to BRL 4,000, and huge gains and very relevant for those families that make up to BRL 3,000. The effects of this increment, the number of families, our addressable market.
Surely this will become clearer in the next weeks. We continue the period to approve buildings to begin sales. This is also a very important point to leave in the radar here. Now, going to page four, with regards to our launches and net sales, we had in the last 12 months closed now in the first quarter 2022, a growth of 44% of our sales, which reached more than BRL 3 billion and BRL 100 million. Everything was very still in the last 12 months closed 2022. In Riva, we had a growth of 3.4x in terms of launches. In the last 12 months, Riva represented 23% of the total launched by the group. This first quarter, as I said, was the best first quarter in the history of the company, BRL 622 million.
The growth in the last 12 months closed in March, was 34% compared to the last 12 months closed in March 2021. We attained more than 2.5 billion BRL in net sales. Direcional had a growth of 12.6% when compared to the 12 months closed March 2021. Riva a growth of 135% in terms of net sales, which is just fantastic. Showing the assertiveness of us having been able to create this segment in order to work with the sale levels immediately above Casa Verde e Amarela. Now going to page number five, where we deal net sales speeds of our products. We notice a very resilient VSO too, when we analyze Direcional VSO in the last quarters between 17.6%. The first quarter 2022, Direcional had a VSO of 19%, Riva 16%.
I would like to stress that the Riva segment where clients have income slightly above Direcional. Here, this is naturally the sales volume is low. Launches are concentrated in second quarter. Because of the scenario that we've seen for demand of this product in March and April, we believe that the Riva VSO should go back to levels above this 16% level we had in the first quarter this year. Another important point to stress here, because of the capital cost scenario that we have in the country that is well over what we had two years ago, a year and a half ago, we are at the company changing certain metrics in order for us to work with VSO above our history, where we would need less capital for our projects. We always considering an analysis, trying to have a fine balance between margin and VSO.
Since we operate within an associative model. When things have been transferred, we don't have the correction of the balance, the true balance of this client. This VSO should be higher. This should demand less capital in our operations. I would say that this VSO increment should be subtle, and we're still analyzing certain impacts and cost increases of our products. The non-sold units, well, we had the opportunity to have price adjustments here to work with very healthy gross margins. I would like to give the floor now to Paim, who will talk about the main financial highlights, and then I will answer any questions you might have.
Thank you very much, Ricardo. Good morning, ladies and gentlemen. Thank you for participating in our earnings release based on the first quarter 2022. Let's go to slide number nine now. Here in the net revenue, we can see an important advance of the revenue relative to the first quarter 2021, going from BRL 440 million to BRL 468 million net revenue. There was a drop relative to the fourth quarter 2021. The fourth quarter. A slightly inferior pace of sales. We sold 4% less. 14.4% less, but it is natural. In the first quarter, January, for example, is a weak month. February okay, March outstanding.
Our expectation here is that we continue to repeat March in the next months. When we look at the last 12 months closed first quarter 2021, we have advance of 13%. In the last calls, we have been talking about the impact of the revenue in 2022. Parting from the premise that launches are occurring all the time, sales too, revenue will certainly happen.
In the beginning of the year, we have a rainy season and then works really do begin all over Brazil. When they begin, this will impact the revenue in a positive way, and we will see a strong growth in revenue this year for sure. To the right of the slide, not only do we show you the net revenue of Direcional now, but also the SPEs not consolidated because of agreements with shareholders. So here, we have an important work here with these SPEs. We are protagonists in the development of these projects. So in the last 12 months, closed the first quarter 2022, we attained BRL 2.48 billion, non-consolidated SPEs too. When summed, we have an advance of 17% relative to the last quarters that ended first quarter 2021. When we look quarter after quarter, the first quarter, there is seasonality, right?
2022 was certainly a highlight compared to the first previous quarters. In relation to the fourth Q, we had this issue relative to sales, which was slightly lower because of a January that was very weak. In slide number 10, we have the resistance, the resilience of our gross margin. We are a player with operational efficiency. Our execution capacity is certainly a differential, and even in difficult moments with inflation, we have been able to, via a good management, transfer prices, manage inventory, and continue with our gross margin in very healthy levels. We know that this gross margin with the impact of inflation, the interest rate effect, there is something that happens. So inflation is not down yet, and this might lead to a gross margin that is lower than what we are presenting.
The hurdle for approval of gross margin is 34%, and this should converge in 2022 to this margin, and you should consider this. We have, in the last years, been able to remain with this gross margin at around 36%. To the left of the slide, we have an important evolution of our gross profit going from BRL 557 million to BRL 577 million to BRL 671 million in the last 12 months, close to 2022. To the right of the slides, we can see quarter after quarter, the evolution of the gross profit, nominal gross profit, except here when we compare it to the fourth Q 2021, which was a very strong quarter. With the demand and seasonalities, we are very happy that we have been able to deliver what we have been able to deliver in the first quarter 2022. Here we have SG&A expenses.
We have worked very hard to transform this. The back office is in full digital transformation. Several projects ongoing that aim for the improvement of productivity of our collaborators with technology as a competence allied to the productivity here of our collaborators, our employees. This has had good impacts, and we can get to lower levels here, because certainly in 2022, we are going to have a larger gross margin. So there will be a dilution effect of the G&A here. Nominally, the net profit remained very close here. So this is an important work. In the back office, we continue with the same amount of headcounts, doubling the size of the company in the last two years. So we have been able to remain with headcounts, with technology, process intelligence and certain ways here, being able to do more with less.
To the right, sales expenses, a very good news. We have been talking to you about this point here. As where we noticed there was room for improvement. The first quarter, we begin to see a slight improvement here in commercial sales expenses. Many concomitant actions taking place here so that we can have greater efficiency with sales expenses. An important technology here with regards to client origination, leads origination, latigation of these leads so that sales assertiveness can be better. If a broker can have a better lead here, more latigated lead, which has wonderful results. This begins real estate sales contract. To improve this workflow is very important, and we have been able to advance here in a very relevant way. We have a lot more to deliver here. There are two effects. The growth revenue growing, which will lead to dilution here.
We are not going to spend more. It is a low-cost company, so we cannot. Cents for us make a lot of sense in all lines, in all floors, in all areas. Here this is not different, but the results begin to appear with reduction of 16% relative to the fourth. When you compare the third Q compared to the fourth Q 2021. Slide 12. Here we present to you an indicator that ratifies the positive vital signs of the company, the EBITDA margin in the last 12 months, and the first quarter, the third quarter, almost, 22%, which is very healthy. Almost BRL 400 million compared to BRL 306 million compared to the last 12 months that ended in 2021. So we have an important advance here. We went from 22% here. So we have been delivering very consolidated EBITDA margins growth.
To the right, the net profit before minority interest. Here net income, right? Reaching BRL 54 million in the first quarter. BRL 36 million here now with adjustments mentioned related to share swap that we contracted. Also a loss related to the sale of the portfolio. We acknowledged this in this quarter. When we compare the last 12 months, 2021 to 2022, we had a growth of 38% and an important margin of almost 13% when we consider minority interest. Next slide, please. 13. Lastly, our capital structure. We continued under-leveraged here in our vision, 15% adjusted net debt over equity. It is one of the most leveraged in the sector. Net debt that is very easy to manage. It is very easy to manage here, and we do this very carefully, very cautious here.
This is the base to do anything in Direcional, parting from a conservative approach, and the debt consolidation schedule is very elongated, 39 months, no problems before us. Cash of BRL 1 billion 60 million, you can pay four years of this debt. So this gives us a capacity to continue operating. Vis-a-vis this volatile scenario in Brazilian, we have capital structure here, and we are comfortable to be able to deal with everything, do what we have to do to avoid inflation. When we have a movement here, we can, because liquidity is very comfortable here, and we are well-leveraged. To the right, the breakdown of our loans and financing our debt, capital markets with an important percentage of our debt. So we are doing well with the capital market. Individuals, CRIs, institutional investors, funders. Very little bilateral debts.
An important work is being done this year to settle more burdensome debts so we can reduce our financial expenses here. We are working here and considering this, and we are also going to go for efficiency here in this item to reduce our financial expenses to improve our bottom line and consequently our ROE. Now we go for questions and answers. We are here at your disposal for any questions that you might have, to answer all your questions.
As arranged, we are going to continue with the questions and answers now. Our first question comes from Bruno Mendonça, Bradesco BBI. Bruno.
Good morning, everybody. Thank you very much for allowing me to pose the question. Ricardo, two questions. First one, the competitive environment. You have been doing very good work to hold on to margins, projects ongoing. Now I would like to think about the next cycle of launches vis-a-vis this inflation that is not. We expect the inflation will continue, and it is taking time to go down. So what kind of effect do you expect to see or you have noticed with this weaker competition here? Because the price of unit is growing, but there is a cap here in terms of the customer's income.
Have you seen opportunities in terms of the purchase of land, something that will help us have a visibility with regards to high margins in the next cycle? Is there a specific segment that comes out, right? The second one is about Direto, which is interesting. It is a BRL 40 million portfolio in the first quarter. But I would like you to tell us a little about the evolution, what you expect for the year, the following years, what are the products that have stood out in this beginning of this operation, and what are the commercial challenges of Direto at the moment? Thank you very much.
Thank you very much for your question, Bruno. To begin with the competitive scenario. In the last weeks, I have visited our operations all over Brazil. I have traveled a lot. And really, based on the scenario that you mentioned, we have noticed a reduction in the volumes of units offered in the Casa Verde e Amarela program. I believe that this issue, companies going through more challenging periods, more delicate periods, specifically out of São Paulo, where we have companies with more solid capital.
Once we exclude São Paulo from the scenario, we certainly have noticed a reduction in the amount of companies working very extensively in this program. You can see the FGTS aside, the unit volume contracted in the first months of 2022. We have seen a huge drop in our results. We have been able to deliver a growing number of sales. So we have had a gain in market shares. We have been able to do very good work here in order to go through these challenges that we have seen all the time. Oftentimes, we could not foresee because of the scenario in the world. But the fact of us having controlled costs for our works, lower volume of projects being offered in all the states we work in. Also, plus the adjustment that I believe was very relevant on 12th of April, the subsidy curve.
I am very optimistic with our operations in Casa Verde e Amarela. Margin resiliency, demand, the possibility of having an increment of net sales fees here at the VSO. It is not a very important increment, but we are working with VSOs above 20% in the Direcional segment. I believe that this is feasible, and we have gone for this. With regards to land. Yes, there is a lot of land, many companies returning land, lots, and these lands have been offered to us, and I would say that it is difficult to see a reduction in terms of nominal values of land lots in our sector. But it remains the same for years. We have greater inflation, that you buy land, in the future, it will be cheaper than today. But the possibility of the land acquisition via swap is a reality.
This is a basic premise for our traditional team here, and this will be even clearer. The return of a capital investor's investment in our project, we will see a growth of the possibility of the acquisition of lands via swap. This is clear. There is a lot of land going back to the market. Less capital allocated for the purchase of land here. Direto is an operation that we are very optimistic with. It is scalable well over the real estate development segment in itself. We grow when we industrialize the construction process. There are challenges. Each city has their own laws from the point of view of works code, environmental laws. Here, there is always a limiting factor here in terms of the optimum point of the size of operations. With Direto, this doesn't happen. Direto, there are three fronts here.
One, as a bank correspondent with operations that have escalated, but here is where we receive a fee for the service given to the client. Also, an operation, which would be the purchase of receivables in the wholesale market, and then home equity operations. The first two are the ones that we are focusing on now, because the cost of customer acquisition is low. Our focus here in Direto is for it to be a company without a balance. It renders services. It's asset light. The main challenge when you go to an operation such as this is where we have tried to avoid a scenario here with certain customers, so that we have a Direto operation going over the cash burn curve, and I believe that we are at the right path, and this should happen before we had imagined.
We want to operate with a scalable business to where we have to contribute with very little resources, and it just generates cash as fast as possible. We are in the initial stages of this operation. But we believe that it is very good, and in time, we will be able to show this to the market too, and this will be clearer for you.
Thank you.
Thank you, Bruno. Our next question, Gustavo, BTG Pactual.
Hello, everybody. Good morning, everybody. I would like to ask two questions too. The first one, Ricardo mentioned the lower competition. March and April was very strong in sales. Because of this, I want to understand the launch perspectives for the year. I remember that you talked about perhaps this year, the growth wouldn't be as strong as was last year. Has this changed? Because vis-a-vis this competitive environment and strong demand.
Secondly, relative to these changes that we saw in the subsidy improvement program, if this, for example, if you've seen any alteration here in the capacity of transferring prices or even your operations. Are you originating more level 2 projects, and more at the base of the pyramid where the increment of subsidy was greater. How do you see this? Thank you very much.
Okay. In terms of launches for the year relative to what we had originally imagined for 2022, no change whatsoever. We have very positive perspective for the year in terms of launches. We have noticed that the demand has been very strong, and this allows us to remain on track to be able to launch everything we had imagined. I've always said in Direcional, we don't launch to build inventory. If the demand is solid, we launch.
In terms of projects approval, we have a strong volume for the year. When we consider our objectives for the year in terms of sales, which are triggers for us to launch projects on those different states. We closed April with a sales projection accumulation for this year. The sales done were well over than what we had projected. All the launches remain here in the company up to now. We have been more careful here with regards to what's going to happen in terms of interest rates in the real estate market. I think this is a segment that is more impacted, Casa Verde e Amarela, because of the higher rates. Riva has done well in March and April. In Direcional, in certain areas, we might even launch more than we had originally imagined, because we've noticed a strong demand here.
Launches is on track, both Direcional and Riva. We have tried to go to even higher levels than last year. With regards to projects, they're all ongoing, and the demand has been very interesting. As of now, I believe that still are according to plan. Relative to level 2, which had the greatest benefits here because of the subsidy curb advance, because it had been a level that had had no benefits. Level 3 had a reduction of interest rates. One also had a reduction of interest rates, and now I think there's been an adjustment in level 2. We continue very optimistic with our operations in this segment. In spite of us having Riva group 3 operations, we are not changing what we had planned in terms of launches. For group 2, we have been working with healthy margins. We see solid demand here.
We are very interested in maintaining operations here with this income level. In April, yes, we have noticed products with this sales level as target. We've seen that things have been included here in this group of potential buyers. We're here to serve these families, to see to these families, and this allows us to have gain in VSO. In terms of margin, we are healthy, and we have tried to increase sales volumes at this moment. Not only going so much after margins, but we want to increase our addressable market, and we see opportunity here in certain segments where we've seen greater supply. With the subsidy adjustments, these lower income families have been able to buy our products again.
Thank you very much, Ricardo.
Thank you very much, Cambaúva, for your question. Next question, Fanny. You have the floor.
Thank you, Paulo. Ricardo, I have two questions in line with what Bruno asked and Cambaúva. It is interesting to note that the increase of the curve, you were more positive with the program, and the other companies operating here think it was not enough. What do you think? I know it is difficult to talk about the other, but what do you think is the differential factor that Direcional has to continue operating with this program after the increase of the curve, and the others continue reducing their exposure? That is my question.
My second question, what do you believe the government would tend to do to motivate other players to go back to the program? How are conversations here with the ministry in order to try to create a third curve? I think this is a combination of questions. Also, Ricardo, you talk about productivity gains offsetting cost increase. Please, can you tell us a little bit about this and how you are becoming even more efficient here to offset this cost gain.
Thank you. Fanny. First, I will try to talk about the macro issue, and then we will go to our specific case. When we analyze the numbers of the program, specifically during this year of 2022, it is clear that the program has been reduced in size in terms of contracting units, subsidies. There is a budget destined to low-income projects that is being used. We are at a very challenging moment of the global economy. We need to generate jobs, for example, here in the country, and have water, sewage treatment access. We saw what happened with the country during this rainy season. This is a need for the country. If you have resources, the resources are not being used.
This is not the ideal scenario. It does not affect expenses cap, it does not affect the primary surplus of the country. Really, it makes sense to use this. When we see that the program is operating below the target, I think it is natural to say that the increase of subsidies implemented until now has not been enough in order to produce all the potential that the country has. I think this general view, yes, I agree. But when we consider the increases that occurred with Direcional now, it is difficult to see, right? We operate in very different regions of part of the companies that are in the program. We are not concentrated in certain areas where the land is more expensive, construction costs are more expensive.
But the fact that we are in states where land is lower cost and we can buy land lots via swaps, we can offer products at lower prices than other companies are offering in areas that are more expensive, like São Paulo. The fact that we have a very diversified operation, geographically speaking, without expressive concentration in any area, this is a huge advantage that brings us huge resiliency for the business. Strength. Yes, engineering. It is in Direcional's DNA. It is basic here. If you look at the history of companies here, very few have operated with level 1 of the program, and we have done this in a very profitable way. With regards to engineering, productivity, efficiency, we certainly believe that this is a company that is very competitive in the Brazilian scenario, that allows us to operate in segments where other people do not see as attractive.
But for us, this is an attractive segment. When we look at the prices of level 1, which are very tight, but engineering certainly makes a difference. It is a priority here in the company. And oftentimes, we say, "It is okay, concrete wall, everybody does." Yeah, furnace. These are commodities. This is what allows us to be competitive here. It is not the mode, the form. It is the intelligence that you have when you begin having the work site.
So we began to operate with modes in 2009, and we are well ahead of other companies here because of this construction aspect. And we also give productivity to our labor. It is in the project. It is in the implementation. Specifically, the executive project, the architectural project in itself. So it is important to make very clear, it is not the mode that makes difference, but it is what is behind everything when we begin with works. I think I have talked about the main points. Subsidy and budget. Yes, we have to use all these resources. And why? Once again, we are in a level 1 scenario. I do not know if there are any more questions, Fanny.
Yeah. With productivity, is there anything different that you are doing here with regards to productivity?
We have changed our product, our typology, implementation, common areas, infrastructure of our project. We have done a lot of changes. We have made a lot of changes here in order to allow us to have a cost per unit that allows us to operate in this income level where we had a change in the subsidy curve. So engineering projects, everything has really gone through a lot of changes here.
Fanny, just to summarize things here. I believe that the differential of Direcional, in order to remain competitive here, specifically with level 2, many larger companies lost interest here. There is an owner of the business that knows the business, has been dealing with this business for 20 years here as an executive. He is also an engineer. He knows everything in detail.
And this week, for example, we do an on the road. All the board goes to the different works. We visit all our lands, all our construction works, sales booths. Checking the competitive sales booths. We never stop. We always go to all the areas we are working in. And I think this is an an important differential factor. And also, we never lose focus, right? We are always focused. We always look at the business. We are a low-income player, focused. There are initiatives, but extremely independent here, right? Direto is independent from Direcional, but focus is very important here and makes a difference. People are often challenging us to lose our focus with different models, different segments, but we never, ever lose focus.
Perfect, Paim. Thank you very much.
Thank you, Fanny, for your question. Next question, Aline, Bank of America. You have the floor.
Hello. Good morning. Thank you for accepting my question. I would like to go back to price transfer strategy that Ricardo mentioned in the beginning of the call. You have had a good increase of price here. So I want to know if there is still room for price transfer, and if yes, if there is space in both segments, Direcional and Riva, that might have a more sensitive consumer because affordability is worse with interest rates. Thank you.
We have tried somehow to go for a balance between price and margin, which justifies the allocation of capital in projects and speed of sales. Because if you do not sell, you do not have return, right? I believe that there is room for continuity, for price increase, in case we notice continuity of the increase of prices of products we buy. Here in Direcional, we do not need to recompose the margins here. Any price adjustment will only happen if we have a cost increase at the other side. In case there is not, our objective is to try to see to families which are at the base of the pyramid, where we have a huge potential for buyer here, right? Families that acquire purchasing capacity here.
We are working with gross margins, which is a level that certainly gives us good and satisfactory return, and we will only adjust prices in case we notice a price increase. I do see room for this, and if this is not necessary, then we will try to work with higher speed of sales where, vis-a-vis this higher interest rate scenario, everything, we have to allocate less capital in our projects.
Currently, where we see a strong consistency of our operations and margins to allocate capital begins to generate important value here for us, and we are going to try to operate with VSO. You have seen this in Direcional. Higher VSO, less capital in the project, and somehow trying to return this capital to our shareholder. We believe will generate more value here with this movement, because currently, we feel comfortable with our gross margins. But there is room for this in case it is necessary. I think in Riva also.
Yeah, very clear. Thank you very much.
Thank you for your question, Aline. We have question from Ygor from XP.
Hello, everybody. Congratulations for the results. Thank you very much for your question. Two points here. First, with regards to cash burn, there was a little cash burn here, but the driver was this the acceleration of launches or the purchase of material. How do you see this strategy where you anticipate the purchase of products? We are going through a more challenging environment here, commodity price rising. How do you see the price of commodities impacting steel here in negotiations? First point. Second, relative to Riva, the next launches, how do you see them in the pipeline? And if you could tell us about the speed of sales of Riva dropping this quarter. Was it because this happened at the end of the quarter?
Ygor, our sector always has seasonality in the first quarter. In the quarter, generally you have months like January that are weaker. It is natural in Brazil. You have New Year's Eve holidays and then Carnival. Our sales volume. March was very strong, but January is always very low in terms of sales. January transfers in February, which was kind of normal, but not very expressive such as March. Generally, you have 20, 30 days of a lag between the beginning of the sale and then of the transfer. It is natural for cash receipt in the first quarter is lower because March sales are transferred to April.
You had a drop here, and it is natural, a reduction here, but it is not different than expected. Also, we had, with regards to certain products where we anticipated procurement, we anticipated the payment term for consumer, where we buy products with lower prices. Here at this moment, we have not seen the need to increase the number of units in inventory because this change varies quickly. When you see the conflict with Ukraine, this forced us to anticipate the purchase of some products. But we have not worked to increase our inventory. To have this inventory is extensive, and every time we buy something, we have to consider how much this capital is going to cost. So here we are trying to have a slight reduction here in terms of the products we have bought for the company.
Now we want to reduce the volume of products that we acquired in an anticipated fashion so that we can have lower prices in the purchase of this material. Riva VSO, normal. March was very strong for Riva. Riva launches were concentrated after Carnival. Most possibly, the VSO here should go back to rise in the next quarters, levels closer to Direcional. This is a scenario we have worked within. We do not see anything different here. I believe that in the first quarter was normal, was not out of the curve. Nothing that concerns us. The launches remained all the way to the moment in the Riva segment, too.
Great. Thank you very much, Ricardo.
Next question, Hugo from Citibank. You have the floor.
Congratulations for the results, and thank you for the opportunity for posing my question.
I would like to continue with Riva, try to hear a little more from you from the point of view of the competitiveness scenario here. We have seen some signs of other players demonstrating that some of the solutions that they found to accommodate the cost-conscious pipeline has been to reallocate products to this mid-income segment, slightly above the Minha Casa, Minha Vida segment. Or have you seen any sensitive change here in terms of competition? And a sensitivity of right, just how difficult it is to convert the sale. Commercial expenses was very low this semester, so it does not seem to be very symptomatic. Have you felt anything here? Thank you.
From our side, we have maintained operations without great changes here in the areas we work in. Group 2, group 3 in Casa Verde e Amarela or SBPE, Riva working with SBPE, Direcional group 2 and 3 without change of products. We have seen attractiveness in the areas we work in all these levels. We have not seen gross margins with much difference between these segments, except for Heber that might demand more capital. We have to work with greater gross margin than Gafisa now to be able to deliver equivalent products.
But in Gafisa now, for us, everything has remained the same. I talked with Fanny, I talked about the areas we work in. We have been able to maintain very healthy margins with regards to all these dividends. So we did not change project to migrate from one level to the other, but we made adjustments in the plans, the project, executive projects, infrastructure.
But to continue working in this level with a return that will justify the allocation of capital in that project and remain operations in this format. Relative to the competition, it is difficult to say whether competition has dropped, because these companies came from. We do not know what is happening with these companies, if they have greater capital or they have more difficulties, which has complained their capacity to launch. If we try to answer, considering Brazil, not São Paulo. Because in São Paulo, it is just one market in Brazil, and we cannot generalize this for the whole of Brazil. Brazil is opposite from São Paulo completely. In my point of view, São Paulo is a different scenario that has forced companies to migrate to higher segments, a greater amount of project products offered, more expensive lands, labor more expensive, equipment more expensive.
If we consider the rest of Brazil, I would say that the scenario is different. Perhaps we see lower competition because the companies have been going through more delicate moments. Not that they migrated the products from one segment to the other.
Thank you very much.
Thank you, Hugo. Next question, Marcelo Motta.
Marcelo, thank you very much. If you could tell us about the minority interest, which is perhaps the line that drew one's attention. It continues growing. You had mentioned that the expectations to see a decrease, you said this in the call. Was this quarter a peak? Should we remain with this level and then go down at the end of the year? I would like to know a little bit more about the minority interest.
Motta, you touched on a very important point here. A superficial analysis here, one does not notice. It does not become very clear the improvement we have noticed in our operations. This improvement has been very expressive. But when you look at the revenue and the last line of the balance, you might have a wrong analysis here. So I would like to use this moment to address this issue. I would say that in most lines, we had very considered and solid results. Also because we have had, in this last quarter, a greater relevance of sales in projects where we have partners.
The minority line is an important part of the profit. It is good that the minority interest in the past gave us important products here, and they are giving results. But in terms of the highlights of our presentation, what I wanted to make clear, it is clear that minority interest will drop with the same revenue and the same G&A dropping too.
It is important to stress this here. We gain in efficiency here. We will most probably deliver a higher gross net profit because minority interest will be reduced here. So with the same revenue, same book plus net profit, and with the reduction of minority interest, this means a continuity of the improvement of our operations. Greater returns without changing anything in our daily operations. I think to have partners in certain projects makes a lot of sense for us to accelerate everything. But now we are in an opposite path where we gain share in projects, and this will be reflected in the same company, same structure, but with higher net profits and higher return perspective. So it is important to touch upon this. You should see really an expressive improvement here because of the reduction of this minority interest.
I don't know if it's going to be in the next quarter because it depends on the sale of projects where there is. We can't be very precise here. I believe to the end of this year, this reduction surely will be very representative and expressive. This point that you mentioned will mean great improvement of our operations.
Motta. Also, just to contribute to what Ricardo said. If you look at slide number 16, you will notice launches of the first quarter 2021 compared to first quarter 2022, we left 79% of Direcional shares of projects to 93%. This has been happening. Its reflection results takes time because our cycle is longer, right? Launches, this is very clear, and we have done the disclosure relative to this point here in slide 16 of the release. Perfect? Just to make sure that we're not missing out on any detail here.
Thank you very much.
Thank you, Motta. Next question, Pedro from CS.
Good morning, Swiss, right? Thank you for the presentation and the questions. Just very quickly that I would like to touch upon, I would like to understand the costs basket of Riva and Direcional relative to INCC, and if there is a difference between both. Where do you see the differences here? Something involved in the Riva project that is not in Direcional, the areas of working. Thank you.
We have been able to operate slightly below the INCC. When you begin to see what happened when the INCC increased in a more relevant way. We had had an increase in Direcional that was in Riva, slightly over Direcional. However, now in the last two months, I would say that things are very well-balanced, because in the last months, I would say that one of the products where we had a greater increase of price is concrete and cement. Together with concrete, we have freight. Fuel costs. This has led concrete to have had greater prices in the last months.
With Direcional, concrete has a greater weight than the Riva product. Direcional was below Riva in terms of price increase or cost increase. It's more balanced now, I think. We're slightly below INCC. One important point to mention here, it's very close, but this year, specifically in May, we begin to see the subsidies that are very irrelevant for INCC. São Paulo, with strong representativity of this index. Since our construction process is less labor-intensive, man has greater opportunity here.
With price increases that we're going to have here now, most possibly Direcional will have more competitive prices here from now on, because we were going to have an increase here. We'll have increase here in our total costs here. We'll be more competitive here when compared to companies that use other types of construction processes.
We don't have any more questions, so I would like to give the floor back to Ricardo.
We are closing this call. I really would like to thank for your participation here. We have been able to cover the main points. Everything was very positive, specifically to the questions and answers. We know we have a lot of challenges before us, but we see our operations on track. We are very comfortable with what we have done, our works, the consistency of our margins.
We will continue to see operations on track and the opportunity to address a market with solid demand. Here, we believe that we are prepared to see to this demand and continue offering product, delivering growth of our launches and sales this year. I really would like to give you this message. I would like to thank you and say that our IR team are at your disposal in case you have any other questions, anything else that needs to be clarified and that we haven't been able to answer in the Q&As. Thank you very much and have a very good day, everybody.