Good morning and thank you for holding. Welcome to Even's earnings call concerning the results of the third quarter of 2024. I would like to point out that for those who need simultaneous translation, the tool is available on the platform. To use it, you have to click on the button Interpretation, the globe icon at the bottom of the screen, and choose your preferred language, Portuguese or English. For those who will listen to this teleconference in English, there is an option available to mute the original audio in Portuguese by clicking on the Mute Original Audio button. We would like to inform you that this event is being recorded and will be made available on the company's investor relations website, where the complete material concerning this earnings call will be available.
It is also possible to download this presentation via the chat icon, both in Portuguese and in English. During the company's presentation, all participants will have their microphones on mute. Following that, we will begin the Q&A section. To ask questions, click on the raise hand or Q&A icon at the bottom of your screen and type in your question to join the queue. When you are called, a request to activate your microphone will show on the screen, and then you must accept it to ask your question. We would like to advise you to ask all your questions at once. We would like to clarify that any statements that might be made during this teleconference regarding Even's business prospects, as well as its operating and financial projections and goals, are based on the beliefs and assumptions held by the company's management and on information currently available.
Forward-looking considerations are not a guarantee of performance and involve risks, uncertainties, and assumptions. Since they refer to future events and therefore depend on circumstances that may or may not happen. Investors should understand that general economic conditions, industry conditions, and other operating factors may affect Even's future outcomes and may lead to results that materially differ from those expressed in these future considerations. Here with us today are the chief executives of the company, Mr. Marcio Moraes, CEO, Mr. Marcelo Dzik, CFO, and Mr. Tiago Krall, Strategic Planning and Investor Relations Director. I will now give the floor to Mr. Marcelo Dzik, Even's CFO.
Good morning, everyone. It is my pleasure to present Even's results concerning the third quarter, as well as accumulated results in the first nine months of the year. In this quarter, we concluded the sale of the totality of Melnick's shares with the goal of giving our shareholders greater flexibility in their choice of investing in Even or in Melnick, in addition to significant cash generation for the company. Starting in the next quarter, company's figures will come exclusively from São Paulo's operation, where we have a relevant history and consistent results with excellent prospects.
I would like to begin with the highlights of the first nine months of 2024. Our net sales amounted to BRL 1 billion. Our inventory sales amounted to BRL 841 million, which is a 47% growth when compared with the previous years. Net revenue totaled BRL 1.7 billion, 38% growth. We reported a gross profit of BRL 459 million, 62% higher than in the same period of last year.
Accumulated in the year, the adjusted gross margin was 30.7%, representing an increase of 5.4 percentage points, which results mainly from higher margins in sales and the positive contributions of launches in the past two years. Quarter-over-quarter, we have reinforced this trend of reconstituting our margins, which can be observed in inventory margins and in the margins of our net sales. We delivered BRL 164 million of net income in São Paulo's operation, an increase of 21% when compared with the first nine months of 2023, and an annualized ROE of 11.7%. Another highlight was accumulated cash generation to the amount of BRL 212 million, as well as the BRL 230 million in dividends paid out in 2024. When we consider the announced amounts that we pay in October. The next graph will show the consolidated composition of results in the quarter.
Even's recovery profit, excluding Melnick, was BRL 38 million, as pointed out in the previous quarter. The BRL 42 million concerning the minority share that had been allocated as financial obligations and deferred proportionately to sales in the second quarter, which positively affected the result, were reclassified and recognized in this quarter, negatively affecting the result by the same amount. When the two quarters are considered together, the effect of this reclassification is noticeable. Selling Melnick at market price, and therefore below its equity value, negatively affected profit by BRL 160 million, resulting in a consolidated loss of BRL 110 million. In the next slide, we present the net income history of São Paulo's operation in the last seven quarters. We can observe the consistent delivery of profit quarter-over-quarter and the increase in the level of profitability based especially on the gradual recovery of margins and efficiency gains.
In the third quarter of 2024, we launched the first project of the joint venture between Even and RFM. The high-end launch is Edifício Jardim, located on Alameda Tietê in Jardins neighborhood, with a PSV of BRL 168 million. Even share is BRL 42 million. We are confident in this partnership, and we expect good results from future projects. In the next slide, we can see some images of this project. We are now presenting our sales performance. Volume of net sales in the quarter was BRL 247 million, with a consolidated SoS of 12%. The sales of inventory remained consistent, adding BRL 841 million to the mix. Regarding cancellations, we closed the quarter with BRL 36 million, which is a stable level when compared with the previous year. It is worth noting we continue to have one of the lowest historic percentages of defaults in our portfolio.
Moving on to the next slide, we delivered three projects in the quarter that represented BRL 260 million of PSV and 480 units. We are at the beginning of a significant cycle of deliveries, estimated to be around BRL 2.5 billion in the next 12 months. These are some photos that attest to the company's high quality and execution. We ended the quarter with a total inventory worth BRL 1.9 billion in São Paulo, ranging mainly from the middle income to high-end projects, and which represents 16 months worth of net sales. Finished inventory ended the quarter at BRL 196 million, representing only 10% of total inventory. Moving on to land bank, we purchased a lot in Jardins for BRL 49 million Even share, and updated another two, which had an increase in their potential and represent BRL 272 million Even share.
Our land consists of 25 lots or phases, totaling a PSV of BRL 5.9 billion, located mostly in prime neighborhoods in the south and west sides of São Paulo city. In the next slide is a relevant part of our strategy. We present our solid capital structure. We closed the quarter with a gross debt of BRL 1.3 million, mostly dedicated to financing production. We closed the quarter with a relevant cash position of BRL 823 million, which represents a net debt to equity of 22%. We highlight the amortization schedule of corporate debt with a very extended period and consistent with our demand cycle. in this quarter, we generated BRL 186 million in operating cash. The sale of Melnick stock contributed BRL 134 million to this result in the period.
We paid out until October BRL 230 million in dividends to our shareholders, collaborating our strategy of focus on profitability and value generation. I will now give the floor to Marcio Moraes, Even's CEO.
Good morning, everyone. I would like to begin by thanking you all, investors, analysts, everyone else, for attending Even's earnings call for the third quarter of 2024. We have had excellent volumes of sales this year, exceeding our expectations, especially when it comes to finished inventory or inventory that is close to delivery date, attesting to the quality and acceptance of our products. Our inventory is at a very healthy level, concentrated in the middle, upper, and high-end segments with only 10% of finished units. In this quarter, we launched the first project in partnership with RFM in Jardins neighborhood.
We have over BRL 900 million worth of land bank Even share for launches in future quarters as a result of this partnership. Due to the interruption of municipal approvals this year, we had a few postponed launches that should be out in the market soon. We have a robust pipeline of launches for future quarters with projects that have been approved or are at the final stages of approval and with relevant PSVs, which strengthen our strategic position in the middle income and high-end segments. We have been able to obtain great business opportunities with an active land purchasing strategy in the most desired neighborhoods of the city. According to this strategy, we have achieved growth and profitability and have paid out substantial dividends. These results are sustained by increase of margins, solid capital structure, efficiency in cash allocation, and optimized operating structure.
We will continue taking advantage of real estate investment opportunities, totally focusing on São Paulo, and we will remain confident in the continuous growth of our results in the future. Thank you all. We may now proceed to Q&A.
We will now begin the Q&A session. Reminder that to ask questions, you must click on the icon raise hand or Q&A at the bottom of your screen and type in your question to join the queue. When you are called, a request to activate your microphone will show on the screen, and then you must accept it to ask your question. Our first question comes from Herman Lee, Bradesco . You were sent a voice command, so you may proceed.
Thank you for taking my question. We have two questions here. First, I would like to understand what is the sell in front of Faena, which is a premium project, and maybe the sales will be more elongated, and how the sales will evolve in future quarters. The second question refers to gross margin. This was the accounting effect of last quarter. I would like to understand the impact of this effect in the margin, how it contributed to these margins, and how this will converge in the next 12 months.
Hello, Herman. Dzik here. Thank you for your question. We had a good launch at Faena, with 20% of the first tower that we opened for sale. It is a very high-end project, so in a very long period of construction. The result has been very good. In the last quarter, we did not have sale because it was not concluded.
The process of negotiations is very long. We are talking about a contract, a branding contract. It is a little more complex negotiating this deal. In the fourth quarter, we have had more than BRL 80 million of PSV in coping sold units. We have been talking a lot about this. It is a long-term project, and we have been working with the customers the best way so we can add value to this project. We are happy with how it is moving along. The construction work will begin next year, so we have a long period of time to work with the clients. Yes, it is a more complex negotiation. Last quarter, June, it is a seasonal period. Negotiations are slower. We have been dealing with sales to add value to this project. Regarding gross margin, we had some seasonal effects.
To make it more clear, we had a margin in this quarter that suffered the effect of the adjusts. This represents 9 percentage points in the quarter due to the adjustments. This is around 31 this quarter, but this would represent 4 points in last quarter. When we normalize this effect, we have basically a 30% margin in the three quarters, which is in line with our projections and the recovery of margins we have been working on. We will work to continue recovering these margins, especially with the future launches. We report an adjusted margin of 30%, 26%, and 40% with a 9% adjustment, but the 26% would also be 30% and some percent. When we consider normalized margin in the nine months, it is around 30%.
Our next question comes from Elvis Credendio with Itaú BBA. You may proceed with your question. Good morning.
I have two questions. The first one is concerning Faena. I would like you to talk a little bit about it from the point of view of competition. There is a lot of competition that will be launched around the Faena project. If you think there is a direct competition between Faena and this other project, and if you think that this may eventually change your strategy if there is some risk of this happening, that you have to change your strategy. The second question concerns deliveries. In your presentation, you said BRL 2.5 billion of PSV in the next 12 months. I would like to understand how much of this delivery is already sold, and how do you see cash generation in the future?
Hello, Elvis. Marcio here. Thank you for your question. Regarding Faena's competition, yes, we see this competition, but it is across the river in Jardim Guedala. I think it's a launch that's good for the market, but there's a very important difference from our project. Our project has a hotel connected to it, which allows for a higher occupation. We are moving ahead with our plan, as Dzik mentioned. It's a long-term race, and our product has been well-accepted. We are going to use the end of the year to divulge, not to advertise this product. We are going to begin construction work in May next year. We will be able to think about this project. We always follow the competition, but we always see it as a healthy thing. Concerning your second question, Dzik will answer.
Talking about the deliveries and inventory, we have a very healthy level. We have been working on this level of 10%. It's a very young inventory. We have some projects to be delivered this year, around 70-some percent sold. We have seen a very important effect in our last deliveries. We have invested a lot in the product, in the project, and the acceptance has been very good from clients. Our SoS has been very quick from the moment we delivered the project. Of course, this is important for sales during the construction work phase. Sales happen with restriction of access. You cannot effectively show the product, but we can see a very strong acceleration of sales.
This is around 10%, and these deliveries happening this year. I'm sure that next year, with more than 70% of this sold, will be good, and it's a normal cycle. We have had good surprises, levels of acceptance. We are using the leisure area, the common areas with customers. We are in line with our expectations of selling these products.
Thank you for your answer.
Our next question comes from Matheus Meloni, Santander. You may proceed.
Hello. Thank you for taking my question. The first one is a follow-up of your last question regarding deliveries. How do you see this issue of the transfers? We have seen some news that Caixa Econômica Federal has been holding up out on some of these transfers. How do you see the situation? Do you see it as normal? You see some bottlenecks? I would like to understand where your head is at in terms of launches.
Hello, Matheus. Dzik here. We are talking about transfers. Taking a step back, we have seen some higher interest rates and all the impact it has in the economy, and some banks signaling some changes in level, Caixa Econômica Federal sending some signals. Directly at our end, we haven't seen the impact of this yet. Everything's going on normal. We have very little dealings with Caixa Econômica Federal. Of course, it's important. But for us, for now, we haven't seen any news, any impact.
We have been working with the same levels of previous years. Of course, we are more protected because we're in the very high end. The percentage in which these clients need financing changes. These people have more access to finance, to credit lines. We are kind of shielded from these higher interest rates. This is not good for the market, of course, but for now, it hasn't impacted us directly. Marcio now will answer about launches.
Our projections for next year, we have around BRL 2 billion worth of projects to launch next year. The first quarter and the second quarter, we do not think we will have any changes, significant changes. We may speed it up. We have some projects at the final stages of approval that could enter this pipeline, but it will depend on how the market reacts. Also, we are working on this partnership with RFM, which will produce more results next year. For 2025 and 2026, we have many launches in the pipeline, and we believe the market will remain resilient for the high-end segment.
Our next question comes from XP. You may proceed.
Good morning. Thank you for taking my question. The first is a follow-up of the previous question regarding RFM. You announced the first launch of this partnership. I would like to understand how you see in terms of timing of launches for the next projects. I think you have some important projects on Alameda Franca and Jardins. I would like you to talk about the timing and also your prospects in terms of participation in these projects looking ahead 2025, 2026.
My second question is about the reconstitution of the land bank. When we compare 2024 against 2023, you had some growth in land bank, but more and more, some projects are concentrated in terms of PSV that demand a larger area that acquisition is more complicated. How calm, how tranquil you are with the land bank, and if you have had some improvement in the pace of approvals, because that is part of the problem we saw in the first half of the year.
Thank you for your question. Let us just start by the first one, RFM. We had a launch in this quarter, Pietté project. In the fourth quarter, we are going to have an BRL 800 million PSV project, Alameda Franca. Even's participation on average is 50%. It could be a little more in some projects. For example, Alameda Franca Even is 60%. Next year we have a pipeline of projects in which Even's participation will be around BRL 500 million. So BRL 1 billion total for next year. Basically in Jardins, Jardim Paulista, Itaim Bibi. These are the projects that have already been approved. We do not see projects for other periods because we still have a land bank for 2026, for the second half of 2026 and beginning of 2027. Regarding land banking approvals, yes.
This year we had a stoppage in this because of the zoning law changes, and they were just finished, wrapped up in the middle of the year. This delayed some approvals in the first half of the year. Some projects might even have already been postponed until next year because of this, but the speed is already normalized. We have had the re-election of the mayor and the staff in this department is, I think, normalized now. It will be normal from now on.
Complementing Marcio's answer, yes, we do invest in bigger projects, which the approval process is more complicated, more complex. It may bring some seasonality into it, so makes it a little less predictable. We are talking about quarter lag. Some quarters we launch a little more, some quarters we launch less. We have this seasonality, especially on a quarterly basis. It is part of our strategy. As Marcio said, we have a very good sized land bank. Approvals for next year are advanced, and I think this will be a more market-oriented approach than really approval-related issues. Thank you.
If you could give me a follow-up regarding this BRL 2 billion of PSV. How much of this you believe is already approved?
Basically, 100% of it. We are already approved or in final stages of approval, a little bit more than that. The dynamics of volume, we do not give you any guidance, but the remaining inventory, if it remains healthy. Right now, we can launch approved projects that are over BRL 2 billion of PSV for next year.
Thank you. Have a good day.
Our next question is from Carla Graça, Bank of America. You may proceed.
Hello, good morning. First, thank you. Congratulations on your results. Thank you for taking my question. I would like you to give an update regarding costs here in São Paulo, regarding materials cost, which is becoming a little more relevant, and also labor cost, which is putting pressure on the margins. If you see a delay. My second question is regarding the margin generation for 2025. If you see you will keep the same level of dividends for next year.
Hello, Carla. Marcio here. I will start by the first question. Concerning the cost, yes, we have been seeing some reflex, especially because of the exchange rate and power, energy. It's affecting our materials cost. It's a concern for the market, but in the long term, we do not see a scarcity of labor. It went up considerably in 2022 and 2023. We recomposed these margins. So this year we will not feel this so much.
Materials inflation, yes, we are monitoring this, and we are looking at it month- by- month to see how this is affecting our costs. The delay of INCC, we see at 1%. So it's 1% above the INCC variation. It's under control. Of course, we are paying close attention to this cost variation. I don't believe we will have any big surprises, but regarding margins, Dzik will answer that.
T hank you for your question. Talking about cash generation, our expectations, of course, it all depends on business opportunities, how we allocate money, but our expectations for the end of next year is around BRL 200 million in cash generation. The guideline as recurring dividends, of course, this may change depending on market conditions, but something around 50% of our net income, it's what we are forecasting for next year. Of course, in 2024, we had a non-recurring effect from the sale of Melnick stock. Most of this we transferred to our shareholders.
Thank you very much, and congratulations again on your results.
Our next question is from Rafael Rehder, from Safra. You may proceed.
Thank you for giving me this room. I would like to approach the issue of clients, how you see. In a recent past, you have been selling for people outside of São Paulo. I'd like to see how you see this dynamic going on now. I would like to approach the funding issue, but concerning the companies. If you have been able to obtain funding from banks or if you have other sources of raising funds.
Hello, Rafael. Marcio here. The first part of your question regarding customers, we have external clients, but 70% of our customers are from São Paulo, and 30%, in our experience at Faena, it was 30%, and the same thing is happening with Faena. São Paulo customers ask this question a lot, what kind of customers is buying? But the offer of these high-end projects with more support, more leisure, infrastructure, and this has been the biggest change. This volume of sales is very good in the high end, but it is basically 70% customers from São Paulo and 30% from outside of São Paulo. This may end a little bit more depending on how the agribusiness performs, but we have seen this change.
São Paulo is becoming a leisure entertainment city, and we have seen this increase in people coming here with this mindset. Dzik now will answer the second question.
We would like to highlight here the quality of our debt. Our main debt is for financing our production, and 100% of our financing is linked to TR savings. We know the market is very scarce. Very few companies can say that. We see that for smaller companies, we have seen more difficulty in raising funds. This question of interest rates and credit. Nowadays, our position is very comfortable, and we can raise capital, we can fund 100% of these projects on TR plus inflation. Thank you.
We remind you that to ask questions, you must click on the Raise Hand or Q&A icons at the bottom of your screen and type in your question to join the queue. Thank you. The Q&A session is now closed. We would like now to give the floor back to the company for their final remarks.
I would like to thank you all for attending this call. Even's earnings call concerning the results of the third quarter of 2024 is now concluded. The investor relation department is at your disposal for any further questions. Thank you all, and have a good day.