Good morning, and thank you for waiting. Welcome to the conference call for the earnings of fourth quarter 2018 of Direcional. Today here with us, we have Ricardo Ribeiro Valadares Gontijo, CEO, and Carlos Wollenweber, CFO and Investor Relations Officer. We would like to inform that this event is only for analysts and investors, and it is being recorded. Participants will be in listen-only mode during the company's presentation. After Direcional's remarks are completed, there will be a question and answer session when further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. We have simultaneous webcast that may be accessed through the company's website at the address www.direcional.com.br/ri. The slide presentation may be downloaded for this website. Please feel free to flip through the slides during the conference call.
There will be a replay facility for this call on the website after it ends. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the beliefs and assumptions of Direcional's management and on information currently available to the company. They involve risks, uncertainties and assumptions, because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that economic conditions, industry conditions, and other operating factors could also affect the future results of Direcional and cause results to differ materially from those expressed in such forward-looking statements. I will turn the call over to Mr. Ricardo Ribeiro. Let me begin the conference.
Good morning, everyone. I would like to thank you again for joining our earnings release call. We are going to talk about the year of 2018. In our point of view, we were able to close the year with very significant results and a significant improvement in the company's figures. Last year, we had a growth of 72% in launches, consolidated figures, and 82% when you take into account only MCMV levels 2 and 3 only.
We had a growth of 74% in net sales and 55% in gross revenue. When we look at only the revenue coming from MCMV, the growth of 146% in revenue. This growth in revenue added to a gain in 17 percentage points in our gross margin, allowed us to deliver again a positive net income in the fourth quarter of last year. Another significant point was the fact that we grew 55% in revenue with BRL 362 million in our cash.
This significant improvement in operations allowed us to pay BRL 90 million dividends in the fourth quarter last year, with a yield of 9% approximately. Yesterday, we announced the payment of BRL 56 million in dividends in March with an additional yield of 4%. I would like to start the presentation on slide number five, and I will go through the main highlights from last year. I would like to highlight the growth of MCMV 2 and 3 incomes that accounted for 5% of our revenue in 2015 and now amounted to 74%. This segment amounted to 74% of our revenue. When we look at this information, we may conclude that this segment will continue to be representative in our results and because of the different gross margin. The gross margin of MCMV is around 34%.
There is a prospect of continuity in the improvement of margins in operations and consolidated as well because of the increase in the share of this level. I would also like to highlight the significant improvement of the middle-income segment of Direcional, especially after we sold to the real estate fund. We delivered 24% margin in the middle-income segment after pay the financial production investment. Moving on to slide six, I would like to highlight the record cash generation we had in 2018, which was by far the best year of the company in terms of cash generation. That allows us to close the year with a very significant and solid capital structure. Even after paid dividends of BRL 90 million in the 4 Q last year, which accounted for 9% of the market cap of the company on that date. Moving on to slide seven, launches.
In the fourth quarter of 2018, we launched BRL 529 million in units, and we ended the year with more than BRL 1.9 billion in launches. It was a growth of 72% when compared to the previous year, 2017, which is a very significant one. MCMV accounted to most of our launches, and this year we do not expect any more contracts in the level 1 of MCMV, because we will be focused on the other levels. Talk about net sales evolution. We had a very significant growth of 84%, and we closed the year of 2018 with BRL 1 billion, 680 million in net sales. It is important to highlight that we had sales of BRL 230 million in the third quarter of the year to a real estate fund of a large amount of our inventory of middle-income segment.
We closed the 4Q of BRL 528 million in sales, a growth of 60% when compared to the same period of the previous year. From this total sales, BRL 41 million came from level 1 of MCMV. We closed the 4Q of 2018 with the next VSO index for consolidated, as shown on slide nine. The consolidated VSO reached 18%, and in MCMV segment, VSO reached 20%, while in the middle income it was 7%. This significant improvement in the MUC was due to the reduction of canceled contracts, as well as the improvement in the economic activity of the country, which allowed banks to lower interest rates. Also, there was an increased appetite for increasing operations in this level. On slide number 10, we have ventures and units available for sale at the end of 2018.
We closed December with BRL 1 billion and 80 million of products available for sale, and 79% of these products were in MCMV segment. It is important to highlight that one year ago, this segment accounted for 21% of our inventory. Today, our inventory is much more adapted to the current demand of the market. The completed units amounted to 21% we have for sale. It is important to highlight that at the end of 2017, the completed units inventory accounted for 33% of the company's inventory. So here, Direcional also showed a significant improvement with a significant reduction in the inventory of completed units. In terms of a land bank, we closed last year with the potential sales of 20.3 PSVs. It is BRL 4.5 billion middle income and BRL 15 for MCMV.
In the last four years, the land bank for MCMV has grown 4x , and the land bank doubled in size. Given that most of the land for MCMV were bought via swap, the equity invested in land was directed to middle-income segment. One of our major priorities is to monetize and bring back this equity that was invested, to bring it back to the cash of the company. We changed the projects for these land. They were originally designated to middle income, and we turned them into projects for the new MCMV. We also worked on the recovery of the middle-income segment. We wait for it to recover to go back to this segment. We will only think about launching middle-income segment if the transfer is made before construction, according to the volume, the project model we operate in MCMV.
If we can have a construction cycle much lower to the old processes that we used to use for construction before 2010, that's more craft and not so industrialized. I would now like to pass the floor to Carlos. He will talk about the financial highlights of the company.
Good morning, everyone. It's a great pleasure to present the financial highlights for the 4Q and consolidated 2018. 2018 was a very important and rewarding year in which we succeeded in a substantial increase in the number of launches and sales volume, as presented by Ricardo. Due to the good performance of construction works, our gross income has improved substantially quarter after quarter.
As presented in the chart on slide 13, 74% of gross revenue in MCMV 2 and 3, we delivered consistent margins between 34% and 36%, and therefore the gross income grows both to the increase in revenue and the improvement in consolidated margin. Our gross revenue amounted to BRL 410 million in the 4Q 2018, and BRL 1.2 billion in the year, significant growth of 121% compared to 4Q 2017, and 55% compared with consolidated figures for the year. In the next slide, breaking it down by segment, MCMV revenue amounted to BRL 307 million in the quarter, and BRL 919 million in the year. A rather robust growth of 138% and 144%, respectively. MUC revenue amounted to BRL 40 million in the quarter, an improvement of 43% when compared to 4Q 2017 as a result of the improvement in sales and reduction of cancellations in this segment.
Increase of the net inflow from savings accounts and a reduction of interest rates in 2018 allowed banks to increase the number of loans to individuals and increase the volume of properties with funding from SFH. The revenue from services also grew 115% when compared to 4Q 2017, due to the new contracts throughout the year and the better construction rhythm. Therefore, we had growth of revenue in all segments in the 4 Q 2018. The good performance of revenue was also fully reflected in the gross income in the quarter, BRL 115 million and BRL 342 million for the year, as shown on the following slide. A growth of 287% compared to the consolidated figure for 2017. MCMV 2 and 3, the gross income totaled BRL 133 million in the quarter and BRL 321 million for the year, a growth of 144% and 152%.
In the middle income segment, adjusted gross income by interest amounted to BRL 8 million only, but a significant improvement in the margin of 24% in the quarter. The growth in the segment of services is less significant for the consolidated figure, amounted to only BRL 3 million in the quarter, BRL 13 million in the year. It is important to highlight that the brokerage revenue from Direcional Vendas is consolidated in the revenue from services and it is almost zero, so decreased the consolidated margin of this segment. G&A are kept well under control as shown on the following slide. We had a G&A of BRL 26 million in the quarter, amounting to 6.5% in the gross revenue. A much better percentage when compared to 2017, when it was 13%. We were able to reduce G&A by 7% year-on-year.
Commercial sales expenses grew in line with increase of net sales and accounted to 8% for the quarter and 7.2% for the year, which is in line with sales growth. We believe that this percentage will remain at this level in the next quarters. On the next slide, it is very important. It is very clear, the significant improvement quarter after quarter in our results. Our net revenue grew by 27% when compared to the previous quarter and 25% in terms of gross income. In the quarter, we had a decrease in two discontinued projects, or we wrote them off actually, which had a negative impact in our result of BRL 10 million. If it were not for that, it would have been BRL 18 million unadjusted, it would have been BRL 28 million. Now moving on to slide 18.
Despite the improvement in MUC sales, the transfer of units occurred in the first quarter of 2019, due to the period needed to sign the financial contracts and register the agreement. Therefore, we had a cash inflow of BRL 294 million, with a growth of 27% when compared to 2017. In the MCMV segment, it had a negative impact by restrictions to allowances at the end of the year, especially the 1.5 went into levels. But we had a significant cash inflow in this segment of BRL 748 million, with a growth of 211%. In the next slide, we have a cash for shareholders of BRL 362 million, which caused our net debt over net equity to be reduced by 26%, even after paying BRL 90 million in dividends in October.
We closed the quarter with a very robust cash of BRL 859 million. In December, we issued a CRI of six years in order to increase the debt profile. So we were able to improve even more the capital structure. Now, let us move on to the Q&A session.
Now, we will start the Q&A session only for analysts and investors. In order to ask a question, please press star one. If your question has been answered, please press star two to remove your question from the queue. Questions will be taken in the order they are received. We ask that journalists contact our press relations area and talk to Daniela Naves on the phone 3134315446 or by email daniela.naves@direcional.com.br. Please wait while we collect the questions. First question from Luis Stacchini from Credit Suisse.
Good morning. Thank you for the presentation. I have two questions. First, regarding the revenue recognition, that was quite high. Despite the larger sales, that caught my attention. Could you explain a bit more what is behind this increase? Maybe recognition of more construction works or projects that were not so active. If you could give some color on this revenue recognition, and I would like to know if it makes sense, looking forward, to see a continued growth in such increase. Does it make sense for you to keep at that level? The second question. In this beginning of the year, there has been some restriction in funds, a reduction in Caixa Econômica Federal activities. There was some lower transfers from the Ministry of Cities. The situation has come back to normal now in March. I would like to give some comments, please, about that.
Luis, this is Carlos speaking, and I will answer the first part of the question, and then Ricardo will answer the second part. As for revenues, revenue was stronger in this fourth quarter, for sure, due to the MUC and level 1 of MCMV. MCMV levels 1.5 and 3 has been growing consistently more in line with sales and the percentage of construction. This revenue recognition for MCMV 1.5 to 3 levels is according to expectations.
At MUC, indeed, at the end of last year, there were two events. One at the end of August that reflected in the beginning of September, and then we had the Black Friday at the end of November, which caused the sales at MUC to have a better performance in the quarter. The VSO, it was clear that we were able to deliver a better VSO in that segment. Since these units are 100% completed, we recognized revenues at their full value of sales for that unit.
That caused MUC to increase the revenue for that quarter. Although revenues come with a relatively low margin, it increased a lot in terms of what we used to deliver after the sale of the fund, but it is much lower, 14%, when you compare to MCMV, where we deliver between 35% and 37%. Revenue from services also increased due to the good performance of the construction works during 2018. We got some revenue from services of BRL 600 million in the quarter. All of these combined caused our revenue not to show so much growth if you compare first and second quarters that we will deliver now in 2019. There is something extremely important, Luis, that you have to pay attention to. Both MUC revenue and level 1 revenue, mainly. This level 1 revenue comes with a gross margin of 6%.
At the end of the day, what you see from now forward at the revenue won't grow at the same level that it has increased when the second and third quarter. However, MCMV levels 1.5 and 3 become more relevant in terms of revenue generation. In level 1, we will continue with the growth of gross income, but without such a significant growth in gross revenue.
Luis, now answering the second part of your question in terms of the performance of operations in this first quarter. In January, first, January was a more complicated month because of so many changes at the ministries of the government that impact the operations. February was better in terms of transfers from financings of individuals. February was better than January. No big issues there.
When we look at the performance of March, we expect that when looking at the quarter as a whole, there won't be any impact in transfer levels as well as cash generation for the company. We believe that in March, we'll be able to recover from this harder and more complex environment that we experienced in January. We didn't decrease the level of launches because of that. Our operations are flowing normally. That's basically it. In case you have any further questions, we can answer.
Carlos, just make sure I understood it correctly. In terms of when compared to 2016 and the levels MCMV 2 and 3, the revenue will continue to grow?
It reduced its share. Yes. The share of it continues to increase, and we'll sell more this year than we sold last year because we have more launches to come. Also the increase in the inventory generated last year, especially at the end of the year, due to new launches. Sales in MCMV will continue. I'm talking levels 1.5 to 3 will continue to grow this year, and consequently, revenues from 2 and 3 will continue to increase.
Maybe not at the same level or the same proportion we have delivered in the end of 2018, but it will continue in line with the increase in the sales volume. Something I intended to highlight in my answer is that its share in the total amount has increased. Probably revenues from MUC was higher than expected in the 4Q. But in level 1, if we look at the second half of 2019, it will likely go down.
These revenues come with a much lower margin than MCMV 1.5 to 3 levels. Although the consolidated revenue grows less, it probably won't exceed this level that we observed in the 4Q, only growing a bit more in consolidated figures, but the gross income continues to grow because the margins are improving.
Okay, thank you very much. Good day.
Next question is from Luiz Mauricio Garcia.
Good morning. My question is about 1.5 level. How is the transition of volume, the reduction of 1.5 level and moving on to level 2, how has this been operating, and what should we expect for this year? Do you know what is the margin for the next 1.5 level? I believe that you already have some figures based on the performance of last year.
The second question is about the purchase of plots of land. I see that you have been buying lots of land, and I would like to understand if this movement continues, at what level would you feel comfortable with your land bank? If you're still looking at land bank in the same level of gross margin, I would like to understand that dynamic. Also, how do you see the land bank for middle and upper-middle levels? What is the solution you give for that? How is the monetization of the land bank for upper-middle income?
Luiz, this is Carlos. I'll start with the answer. Then he will complement on that. The important thing is that last year we had a sales volume in 1.5 level that was quite significant, over 30% of the total sales for the year.
We took advantage of the good moment and the high subsidies for this level to launch projects we had for that segment. In Contagem, we launched, that was almost for level 1, and we were able to launch a project for 1.5 level, and we sold everything in 2018. It was very good. But within our business plans, new launches were expected to be much lower for this year than last year. We expected to launch less than 20% of the total launches in the level 1 .5 . Some of these projects are easy to render them more flexible and sell them at level 2 of MCMV.
What we basically expect for this year, instead of selling 20%, we may sell, let's say, 12%- 15% at level 1 .5 Because we can't launch now something that's 100% at that level, at that segment. Make some adjustments for payment terms, in terms of down payments and installments for customers at that level, so customers can adapt and buy with lower subsidies or without subsidies. But we believe that at the end of the day, the impact for Direcional will be very low. Because in our business plan and in the vocation of this land bank and project we had to launch for this year, the projects that were meant for level 1.5 d id not account for much in terms of the total. Talking about now its impact on the new conditions on the sales of our supply.
Up until last year, we were talking about the subsidies on the level, which had a higher impact due to the changes of these law enacted last year. Until the end of March, we're operating on conditions of last year, so it's hard to say what will be the real impact of the new conditions. Because at Direcional, we have a very small sales volume in these new conditions. Almost everything is in the old conditions. In the projects A, 150 units or 50% of the units. In projects where we have exceeded this number of units, we can only sell at level 2. So it's still very early to know what will be the impact for us. What I can say is that at level 1 .5 , the VSO was very significant. We were selling almost 40%- 50% in the quarter.
I think this reduction was correct. Since the volume of subsidies cannot be increased, we made the right decision to make the conditions more restrictive, were a right decision. There has been a reduction in the VSO, but in my opinion, it won't make the segment uninteresting to operate in. But I cannot express the actual impact right now. Well, since 1 .5 level accounted for 20% or 25% of what we did, and now we have much less, it will amount to 12% to 15% of launches for this year. Although the impact of VSO in the 1 .5 level is not so big, the VSO consolidated tends to be lower than last year. But I believe it's healthy. The VSO will remain healthy. I don't see major problems because of that.
As for the purchase of land bank, purchase of land, we have purchased a significant amount of land, especially in areas where we are growing in operations. For example, the northeast of Brazil and some cities in the interior of São Paulo. However, in other areas where we have a big sales volume that is steady, we have not grown so much in the purchase of land because that is steady. We have not changed anything in our policy for land acquisition. We expect the same levels because the gross margin levels justify our entrance in this type of business. We will not join any business, we will not operate in any area of business where our margins are not justified. It does not make sense to have gross margin decrease because acquisition of new land.
It is important to highlight, though, that we have operated with gross margins a bit higher than what should be a recurring gross margin because we have been able to build at costs a bit lower than what we approve. So these savings in construction works have allowed us to work at gross margin a bit higher than the minimum gross margin that would justify the operation of that program. You have seen in this quarter a reduction of the gross margin from 37% to 35%, which is due to a product that has a significant revenue recognition that was originally for MUC, that was changed to MCMV. So this cash generation will be higher than the income because there was a return on equity invested in this land bank. This had an impact on the gross margin. But it does not mean that the gross margin will decrease.
There may be one or two launches of the middle income that will have some impact, but it is not recurring. You should not expect a significant reduction in the gross margin. As for the monetization of middle and higher upper-middle income land bank, we have tried as much as possible to direct them to MCMV. But in areas where it was not possible, we have noticed a significant improvement in the environment for middle-income segment, especially when we look at the disposition of banks to go back to operating at that level. So we see interest rates dropping, banks other than Caixa Econômica Federal giving loans to financing projects before construction, which has been very important for this segment. So I do not see why we would not go back to operating in this segment.
It is different from MCMV, where there is no risk of cancellation or where the need for capital investment is much reduced and allow us to deliver a return on invested capital that is much higher. So this assumption is basic for you to see us going back to launch any product. The funding source is what changes, but the business is the same. So we have to keep a close analysis and think about launching a new model of transfer of loans before construction.
The next question from Itaú BBA.
Good morning, Ricardo and Carlos. Thank you for the presentation. I also have two questions. First, regarding a comment you made about the MUC gross margin. You said that the gross margin recognized amounted to 24%. If we compare this to the figures of the first quarter, I think it is a significant reduction. The margin of this project were smaller than the remainder of the project. I would like to understand if this 24% are really something you believe will be recurring. From now on, will products in this segment present this margin? Was it an outlier given the special mix of this quarter or promotional sales that you made and mentioned? I would like to understand what will be the MUC gross margin from now on.
The second question is about the write-off you mentioned in the quarter for non-recurring expenses. I would like to understand a bit better what were the projects and the things you faced in that unit.
This is Carlos Wollenweber speaking. Thank you for your questions. They are very relevant. As for MUC, the margin of our middle-income segment, we were able to deliver a much better margin when compared to previous quarters, basically due to two effects. The first and most relevant one is not that before the project, we were selling below cost or having any loss or accounting losses, but it suffered a big effect from cancellation. Since we sold most of the product from that fund, all the cancellations that happened were in this fund, the part that was sold to the fund. The cancellations from the unsold part were significantly reduced, caused the return on revenue also to decrease, helping the margin. The second issue is that the land of the projects that were not sold, most of them that stayed do deliver a better margin.
These are projects that we launched a bit later on with a better profitability and with the land acquisition cost, which was lower. The projects that were left, on average, have a better margin than those sold to the fund. All of this contributes for the margin. When you look at the adjusted margin, it was zero, and in this quarter it went to 24%. Looking forward, whether if this is recurring or not, there are two things to consider. The adjusted gross margin will probably stay at this level, less or a bit more or less, but at this level, basically. But when you look at the margin after interest, since in January, we have sold or paid 100% of the loan. Direcional now doesn't have any debt left in terms of middle-income projects in our balance sheets.
What we paid for every quarter that were appropriated as an inventory cost will no longer exist. With time, as we sell these units, the gross margin will be close to the listed or adjusted gross margin. What used to be a problem in our results or in the past, has a small margin but doesn't cause any loss to our results. On the contrary, it provides a positive margin. The second question about non-recurring projects. These were middle-income segment projects, and given the write-offs that we made, they were concentrated in two projects we had, one in Manaus and one in Rio de Janeiro. Despite the improvement in the middle-income segment, we see now banks with a greater appetite to grant loans, and there is an opportunity to operate on a segment that's above an MCMV level 3.
We don't see us going back to operations in these levels. We used to operate in Manaus and Rio de Janeiro. So we decided to write off these projects, and this is a non-recurring effect.
Thank you very much for your answer.
The next question comes from Gustavo from BTG Pactual.
Hello, good morning. I have two questions as well. The first one, could you talk about the expected launches for 2019 in terms of volume, how many units, and also in terms of product mix? You've mentioned something that maybe you won't have level 1 launches this year. Are you thinking about having launches in the middle and upper-middle income depending on financings, and also using aluminum mode or construction techniques that you use for MCMV level. I would like to know about the mix of launches for 2019, because that's not so clear.
The second question is for expectation, not only in terms of cash generation during the year, but mainly capital structure. I know you paid a lot of dividends last year with the income from FII and you announced interim dividends now. Could you talk about the leverage of the company throughout the year and what is the optimum expectation in terms of leverage level? Thank you.
Cambauva, let me answer your question. Last year, when we look at the level 1 projects, we reached BRL 1.9 billion in launched volume. I would say that we're getting close to an optimum volume where we can reach a good efficiency in the reduction of our G&A. We believe that the 4 Q level is adequate for SG&A.
We do expect growth in our launches for 2019, and we're able to deliver that growth when you look at the projects we have in the company and the stage of approval of these projects. But I'd say that the growth in launches won't be as significant as 2018 because then we started at a very low basis from 2017. Direcional doesn't want to be the largest company and to make launches at very high rates indefinitely. Of course, we could operate a higher volume than we currently operate, but we only do this if we're able to deliver high efficiency. So growth with efficiency. Our focus is to continue to increase our margins, continue with the turnover rate of our assets to provide increased returns for our shareholders.
All this effort comes from increase in the net income due to the increased efficiency and reduction of our debt, paying dividends, because in the current model we don't have to continue to increase our net equity. When we think about last year, 2 and 3 and 1 together will grow this year, always observing the market conditions and not to increase our inventory level significant. If we can keep a good VSO over the amount of products in a healthy level, we can increase launches. But the main focus of the company is the profitability and not in terms of volume of launches.
Now talking about dividends, I believe that what we paid for 2018, which amounted to BRL 146 million, consider the last announcement of BRL 56 million last night.
This is very much in line with our policy, which is to pay 40% of the net cash generation. Last year, we generated BRL 362 million, but we used this cash generation to deleverage the company. We went from a level to 10% now. We do not believe it makes sense to deleverage the company much more than that. When you look at it structurally, if you look at the balance sheet of the company, we still have some capital in fixed assets. Despite this all sales to the fund, we still have some inventory in middle income. Most of it completed, and we will sell these units now to the retail market, and this cash there will be no need to reinvest it in the company because the funds allotted to MCMV are already come to a good level.
As Ricardo mentioned, we still have capital invested in land, lands that were bought in the past and were meant for middle income, and that now are being redirected to MCMV level 3 above, slightly above. We will bring back this capital to the company because it does not make sense to hold all this money in our balance sheet because our main strategy, as Ricardo highlighted, is to increase profitability and the yield of the company. We will capitalize on the size of the company, the amount of income we deliver versus the capital allotted in our balance sheet. Going back to the profitability levels of 2013, 2014. Our strategic direction is this, looking forward, in summary, it does not make sense to deleverage the company any further that we have done to this moment.
There is still some fixed assets in our land bank that will be sold in the next quarters, or not sold, but will be deleveraged.
Okay, thank you. That is very clear.
Next question from Andre Mazini from Citi.
Thank you for the call. My question is about the lower in investment of BRL 10 million. What project was that? What project was that? From now on, could we expect any write-offs like that, similar to that? Thank you.
Hello, Andre. This is Carlos speaking. As we mentioned before. Basically, these were projects we believe it did not make sense to launch these products again. Two in middle income and one in the commercial segment. In these two areas, Manaus and Rio de Janeiro, in just two cities, that we believe that for this type of product, these are very difficult areas to operate in.
We do not see in the near future the market to go back. It would not make sense for us to make launches in those segments in those two cities. From now on, we do not think it would happen again. It was a non-recurring effect due to tests we make every year in terms of expected launches, in terms of acquired land or investment in projects in which we have made expenses to market the project or in the project itself. But looking at the next quarters, we do not see any further needs for write-offs.
Okay, thank you. That is clear.
I would like to remind you that to ask a question, please press star one. Please wait while we collect the questions. This will be the final announcement. To ask a question, please press star one. Thank you. The Q&A session has now ended. I would now like to pass the floor to Ricardo Ribeiro for his final comments.
I would like to thank you again for attending our call and say that we are working to continuously improve the financial and operational performance of the company. We're optimistic about the strategic decisions we made in the past, which is reflected in significant improvement of our figures. We believe that in order to justify our operations, we have to work at profitability levels much higher than our cost of capital, and we haven't yet reached those levels. The search for improvement continues, and we believe we'll improve quarter after quarter, delivering better results as we propose to do here at Direcional. Thank you very much. Our RI team remains available should you have any further questions regarding what we discussed in this call. Thank you all and have a good day.
Thank you. The conference call for the earnings of Direcional for the fourth quarter of 2018 has now ended. Please disconnect your lines now.