Good morning, and thank you for holding. Welcome to Even's earnings call concerning the results of the first 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 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 IR website, where the complete material concerning this earnings call will be available. It is also possible to download this presentation via the Chat icon in both 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 session. To ask questions, click on the icon Q&A at the bottom of the 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 activate your microphone 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, may lead to results that materially differ from those expressed in the future considerations. Here with us today, the chief executives of the company, Márcio Moraes, CEO, Marcelo Dzik, CFO, Tiago Krall, Strategic Planning and Investor Relations Director. I will now give the floor to Marcelo Dzik, Even's CFO.
Good morning to you all. We are pleased to present Even's results for the first quarter of 2024. This presentation will focus on São Paulo's operation without considering the equity we have in Melnick.
The consolidated figures and thorough breakdown can be found in the earnings release on Even's IR webpage. I would like to begin with the quarter's highlights. We sold BRL 284 million worth of inventory, a 70% growth when compared with the previous year, demonstrating the strong demand for our products. This quarter, net revenue totaled BRL 404 million, which represents a 24% increase. We reported a gross profit of BRL 106 million, 23% higher when compared with the same period of last year. The adjusted gross margin was 30.5%, and our REF and inventory margins closed at 25% and 30.9%, respectively. The net income of São Paulo's operation was BRL 53 million, yielding an annualized ROE of 13.1%. In the consolidated results, we delivered BRL 65 million in profit.
We did not launch any project in São Paulo this quarter, but we are going to launch in the second quarter the first phase of Faena São Paulo, an iconic project in the Faria Lima region with a PSV of BRL 500 million Even share, as well as Edifício Jardim, a project in partnership with RFM. Now we are showing you our sales performance. The volume of net sales of inventory in the quarter was BRL 284 million, a significant increase when compared with previous quarters with a VSO of 12%. Concerning cancellations, we ended the quarter with BRL 54 million, in line with the average level we saw last year. It is important to notice that we have one of the lowest historic percentages of delinquency in our client portfolio.
Moving on to the next slide, we show you the delivery of Modo Ipiranga with a PSV of BRL 197 million and 598 units. We closed the quarter with a total inventory of BRL 2 billion in São Paulo, mostly in the middle income to luxury segments, representing 16 months' worth of net sales. The inventory of finished units accounts for just 14% of total inventory. Moving on to our land bank. We purchased one plot in São Paulo's Campo Belo neighborhood with a PSV of BRL 439 million. Our land bank comprises 18 plots or phases amounting to a PSV of BRL 5.4 billion, located in prime neighborhoods of São Paulo City, mainly in the south and west sides. In slide nine, an important part of our strategy, we present our capital structure.
We ended the quarter with a gross debt of BRL 1.1 billion, most of it to finance production, and a cash position of BRL 601 million, translating to a net debt to equity ratio of 25.2%, considering the company's adjusted consolidated equity. We highlight our corporate debt repayment schedule with an extended term and consistent with our business cycle. In the quarter, we generated BRL 29 million in operating cash, and the sale of Melnick's shares had an impact of BRL 82 million in the cash generation of the quarter. Now we will show you the evolution of our equity in Melnick. In order to grant shareholders more freedom of choice between Even and Melnick, and also considering the relevant cash generation for the company, we announced last March the sale of Melnick's stock.
As of now, we have sold 14.4% of our equity with a corresponding cash generation of BRL 143 million. As a consequence of this sale, Melnick is no longer controlled by Even and is now a company with dispersed ownership without a defined controlling entity. The current equity owned by the company is 23.2%. I will now give the floor to Márcio Moraes, Even CEO.
Good morning, everyone. I'd like to begin by thanking investors, analysts, and everyone else for attending the earnings call for the first quarter of 2024. The quality of our products can be verified by the sales over supply ratios in last year and in the beginning of this year. Despite the typical seasonality, even more prevalent in the high-end segment, we had a relevant volume of sales inventory in this quarter.
Whether they are more recent launches, such as Casa Sabiá or projects that will be finished soon, sales results were good, which reduced the average sales period of our inventory to 16 months. We purchased a plot in Campo Belo, where Even has already launched over 20 projects, and we are preparing another special project for that neighborhood. In spite of having a very robust land bank, we have seen good opportunities for new real estate businesses, and we are ready to take advantage of those. We will launch in the second quarter phase one of Faena São Paulo, an iconic project in Faria Lima region. We invite you to pay us a visit and get to know the experiences we have prepared in its almost 20,000 sq m.
Concerning financial results, this was the fifth quarter in a row in which we delivered relevant, consistent results, and we expect to keep this ascending trajectory. Our focus is on profitability and value generation to our shareholders. As for our partnership with RFM, in line with and complementary to our operating strategy, we have built a relative land bank. For 2024, we have in the pipeline the first high-end project in Jardins neighborhood. We offer our condolences and full solidarity to those affected by the tragedy in the state of Rio Grande do Sul, and we hope that normality is reestablished as soon as possible. We have been following the situation closely through Melnick, in which we have a 23% equity. In closing, we will remain focused on sales, monitoring the market and deciding how to proceed at each launch.
Absolutely certain of our operating and financial capacity and of our ability to generate real estate businesses with high added value. I thank you again for your attendance. We can now proceed to Q&A.
We will now begin our Q&A session. Remember that to ask questions, you must click on the Q&A icon at the bottom of your screen, 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 activate your microphone to ask your question. We would like to advise you to ask all your questions at once. Our first question is from Pedro Lobato, from Bradesco BBI.
Good morning, Márcio, Dzik. Thank you for this opportunity. I would like to ask a question about gross margin. How you see the trajectory of this gross margin. If you see this as a question of product mix. If your previous projects as they are delivered, then in the next cycle, this will help the margin to recover. The second question is the purchase of this land. Now that the balance is not a net cash anymore. If you will go back to swaps or if you will have some cash burn in this process.
Hello, Pedro. Dzik here. Talking about gross margin. We have been emphasizing, we even show our backlog margins, our REF margins, and we have seen this convergent trajectory of these levels of 80%. We had a very good quarter. Of course, quarter-over-quarter, depending on the mix, we are going to have some fluctuation. But as the new launches balance these margins, our expectation is that our margins will go up.
We see at end of the year and beginning of next year at a level above 30%, and we have already had a good recovery. The next quarters, we are going to have some oscillation depending on the mix, but the trajectory is as we predicted. Regarding the land bank, we still see some room for purchasing land in cash. We have built the channels, the leverage channels that are very suited. Depending on the risk, we can choose one alternative or the other. We have a very good quality debt. We still have room for making good purchases, and depending on the project, we are going to choose the best way to allocate capital, cash, swap, or maybe even a hybrid between both.
Thank you, Dzik. Good day.
Next question is from Rafael Rehder from Safra.
Thank you for the opportunity. I have two questions. I would like to see if you can update us, how the pipeline of launches is for the year, especially for the second half. I think the second quarter will be Faena. The second question is, how you see sales now that we have one and a half quarter. If in April we had a worsening in the macroeconomic scenario, and if this has impacted the sales for the company.
Hello, Rafael, Márcio here. Regarding the pipeline in the second quarter, we are going to launch Faena. In the third quarter, we have a project that probably will be in Brooklin or in Vila Madalena. We should have two launches, because Faena will require a lot of attention from us. It is our main launch for the year, but we are going to have one or two other launches until the end of the year.
Without defining exactly which one, it will depend on the market, we are going to have a better absorption. We will have the first launch with RFM, which is going to be in the market probably by the end of the year. Another launch with RFM now within the new legislation regarding the master plan for this year. So we will have probably two or three launches from Even and one or two with partnership with RFM. Regarding sales, it is behaving well. We had the last month of the first quarter was very good. We see that this remains. We have not had any consequence due to the fact that the basic interest rate has not dropped as what was expected. This will probably the sales volume will remain, will keep the speed.
Thank you. It is clear. Have a good day.
Next question comes from Matheus Meloni from Santander.
Hello. Good morning. Thank you for taking my question. We have two questions here. The first is to understand how you see the cost, material cost trend and labor cost trend, especially in São Paulo, and what you can see in terms of cash burning along the year. What is your expectations in terms of dividend payment? Thank you.
Hello, Matheus. Good morning. Márcio here. Regarding costs, we have just seen the labor readjustment. It was within expectation, exactly what we predicted before. They are not much of a secret yet there. It was within expectations. Regarding materials, we have not felt any changes and significant changes. Our main materials, oil, minerals, ores, it has been stable, so our prices will probably not change. So we have a good prospect of not experiencing any sudden changes in the cost of labor and material.
The only one that can affect us, much more, connected with the Minha Casa, Minha Vida project, that will have some consumption of labor. Our projects are more higher end. We have a specific labor for them. Regarding cash flow, Dzik will answer.
Hello, Matheus. Regarding cash burn, we have an expectation of some cash burn. In 2023, we burned cash. In 2024, we have an expectation of burning less cash than in 2023. We have a very good cash generation already contracted for 2025. We had an effect that was not planned, the sales of Melnick stock. We had a cash variation in the first quarter. It will obviously depend on the acquisition of land and launches, but something like a slight cash burn in the coming quarters and some relevant cash generation in 2025.
This is what we project, we forecast at the moment.
Thank you.
Next question is from Andre Mazini from Citi.
Hello. Good morning, Márcio, Dzik, Krall. The first question is, what was the payment standard for Fasano, which is a very high-end project, similar to Faena. If it was 50% or even more before the keys, if you believe it will be similar to Faena, the idea that Faena people have liquidity. How do you think the people that buy Faena will pay if it will be similar to Fasano? The second question regarding Melnick, to confirm the understanding that the company will start unconsolidating in the second quarter from Even if the idea is to continue the divestment up to 0% stake in the company.
Hello, Andre. Dzik here. Talking about payment conditions, we are very concentrated in the high end. Today, part of our projects use Fasano as a reference. They have a similar profile. Our cash projections, we are very conservative. In practice, we know that this customer usually pay much more than we use in our projections. For you to understand, in Fasano, we had 80% of the payment happen before the permission to occupy the building. The perception of this initial negotiations for Faena, we think we are going to have a similar profile. Remember, and keep in mind we are more conservative in our projections. Talking about Melnick. We have been emphasizing two points. Today, after it is going public, it is a company operationally independent. We see two different operations, but on the other hand, we see value. It will depend on opportunity.
It may happen that this divestment happen in the short term if the opportunity arises, or we can carry it for longer, knowing the value the company has. It will depend on the opportunities. We have detailed both operations in our release, so keeping a good history on this. We started in 2023, continued in 2024. It will depend on the opportunity. We know the management, and we will make decisions based on that. Regarding unconsolidation of results, the idea was to unconsolidate this in the first quarter, but because of auditing issues, we will probably leave it to the second quarter. Our people are working exactly on this. The first expectation was to be unconsolidated in the first quarter, but it will probably be postponed until the second quarter.
Thank you, Dzik.
Our next question is from Elvis Credendio from BTG Pactual.
Good morning, Márcio, Dzik, Tiago. One question on our side here. Regarding your capital structure, how you see it from now on, this entrance of cash due to Melnick sale, if you are going to pay it in some dividends, what is the prospect of cash generation, how you see leveraging? If you are comfortable with that, and how this would talk with the future dividend payout rounds.
Hello, Elvis. It's Dzik here. We talked a little about cash burn, just recapping. We talked about leverage. We burned cash in 2023. We projected a slight burn for 2024, and cash generation for 2025. You asking, I gave an approximate reference. I said up to 10%, that's a preliminary reference. We had an injection of capital through the sale of Melnick stake, so the projection is more or less the same.
Because of the effects that we had in Melnick, it may go up a little. But the idea of the company is to be a good dividend payer. We talk about 50% of the income of the result. We had this injection of capital, so we have already announced dividends, and we expect, of course, this will depend on the evolution of future quarters. Cash generation, we're going to follow the market and maybe pay out even more dividends. In the next years, this will be more or less the projection we make, 50%.
The Q&A session is still open. We remind you that to ask questions, you must click on Raise Your Hand icon, and we'll open the microphone for you. Our next question is from Ygor from XP Investimentos.
Thank you for taking my questions. I'd like to understand how you see this dynamic regarding the pressure of labor, how you see costs. If you see some material will put pressure on these costs. And how you see the competition, if you see some segment where the competition is stiffer. Those are t he two questions.
Hello, Ygor. Good morning. Márcio here. I had mentioned in the beginning that labor, we have just finished up the readjustment. It was 4.5%, the labor readjustment, the payroll readjust, in line with expectations. So we do not see a pressure in the increase in labor costs. We see that there will be an increase in labor, but on a specific segment of the market, which is different from the one we use in the high end. Regarding the cost of material, oil, ores, energy, it is still stable for this year.
We do not foresee any great variation in relation to the INCC index. All our construction work is within cost and within deadline. Regarding land, we have been studying land bank because we have this expectation of buying case by case. We put together lots, 20, 30 lots together. It takes sometimes two years. We do not see much competition. I think companies are visiting the land that they already have in their regions of interest. Our interest for Even is south and west sides, and RFM Even is Jardins and Itaim Bibi. We have some projects to be launched in the next one year up to the end of 2025. We have enough land bank. So we are prospecting land for 2026, and we still have time for negotiations.
Regarding the question of land, the purchasing of land, what are the regions you see you are more interested in? Actually, our region of more interest is the south side and west side. We are looking for Brooklin a little less because we already have projects there, and there is a lot of competition. If you see our last purchase in Campo Belo, we purchased a very big piece of land. It is a region with a low supply. We are looking for region with less supply, with less competition, and gain price. This price strategy, the neighborhoods that are not high-end, increased in price in these past years, and the neighborhoods around are now gaining price. For example, sub-project Casa Sabiá in Moema. We are reaching BRL 28,000 per square meter, which was very difficult to reach before.
Our focus regarding neighborhoods is Vila Mariana, Itaim, Vila Madalena, which already have some projects. We are going to be concentrating more on the south side.
Thank you.
The Q&A session remains open. If you want to ask your questions, you can click on the Q&A or Raise Hand icon. There are no more questions, so the Q&A session is now closed. We would like now to give the floor back to the company for their final remarks.
In closing, I thank again the shareholders, the collaborators, the partners, and remind you that our IR team is always ready for your questions. Thank you.
The results video conference for Even's first quarter of 2024 is now closed. The Investor Relations department is available to answer any other questions and queries. Thank you very much to the participants, and have a good day.