Good morning, and thank you for holding. Welcome to Even's earnings call concerning the results of the second quarter of 2023. 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 IR website, where the complete material concerning this earnings call will be available. It is also possible to download this presentation.
During the company's presentation, all participants will have their microphones on mute. Following that, we will begin the question and answer session. To ask questions, click on the icon 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 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 risk, 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 this future consideration. Here with us today are the Chief Executives of the company, Mr. Márcio Moraes, CEO. Mr. Marcelo Dzik, CFO. Mr. Tiago Krall, Strategic Planning and Investor Relations Director, and Mr. Leandro Melnick, Chairman of the Board. I will now give the floor to Mr. Marcelo Dzik, Even's CFO.
Good morning, everyone. I am pleased to be here presenting Even's results concerning the second quarter of 2023.
Aiming at providing more transparency to Even's and Melnick's separate operations, we will now present the figures concerning Even São Paulo, excluding Melnick's participation. In our release, you will be able to find in more detail the breakdown of the consolidated and ex-Melnick figures. I'd like to begin with the highlights for Even São Paulo in slide three. In the graph on the upper left-hand side of this slide, we highlight the significant increase in the volume of launches to the amount of BRL 774 million Even's share, which represents a growth of 89% when compared with the same period of last year. Our net sales totaled BRL 541 million Even's share and represented a growth of 55% when compared with the same quarter of last year. Our net revenue totaled BRL 517 million, up 41% when compared with the second quarter of last year.
We reported a gross profit of BRL 197 million accumulated in the year, up 35% when compared with the same period of last year, with an adjusted gross margin of 25.5%. The operation's net income in São Paulo was BRL 46 million in the quarter and BRL 92 million in the first half, representing an annualized ROE of 12.5%. We maintain a solid financial structure with a net debt to equity of 10.5% and cash position of BRL 543 million.
Moving on to launches in slide four. We had three projects launched in São Paulo, totaling a PSV of BRL 887 million, of which BRL 774 million is Even's share. In the next slide, we show you the renderings of the projects in São Paulo, namely Casa Alto de Pinheiros in the luxury segment, and Joaquim and Madre in the upper middle segment.
In slide six, we present our sales performance. We had a great performance in the launches with an SoS of 44% in the quarter, as you can see in the graph on the left-hand side of this slide. In total, we sold BRL 541 million Even's share and reached a total SoS of 21%. Concerning cancellations, the graph on the right-hand side of the page, we closed the quarter with BRL 59 million in line with previous quarters, despite the significant volume of recent deliveries. It's worth noting that we remain with low levels of default in our client portfolio. In the next slide, we show our deliveries. In this quarter, we delivered the Fasano Itaim Hotel and Modo Saúde projects, totaling a PSV of BRL 430 million. Again, the photos of the projects are a testament to the quality of the projects delivered by
Even. In slide eight, we break down our inventory. We have a total inventory worth BRL 2 billion in São Paulo, of which only 14% is concluded. Out of the inventory under construction, 88% will be delivered from 2024, therefore, giving us plenty of time to capture the best value possible for our products. Concerning the deliveries to be made in 2023, 59% is sold, as you can see in the bar graph.
Moving on to our land bank in slide nine. We have currently BRL 4.9 billion in land bank, Even's share, comprising 23 lots located in prime neighborhoods in the city of São Paulo, mainly in the South and West Side. In the quarter, we purchased two lots in São Paulo, in the neighborhoods of Vila Madalena and Jardins, with a PSV of BRL 782 million. BRL 645 million of which is Even's share, strengthening our positioning in high-end projects.
In slide 10, as a relevant part of our strategy, we present our solid capital structure. We closed the quarter with a gross debt of BRL 707 million and a cash position of BRL 543 million, representing a net debt to equity of 10.5%. In the quarter, we burned BRL 91 million of operating cash, especially on the purchase of land and on our construction work.
In slide 11, we present our consolidated financial indicators. Net revenue in the quarter totaled BRL 759 million, up 13% when compared with the second quarter of 2022. We generated a gross profit of BRL 161 million with an adjusted gross margin of 23.5%, and a net income of BRL 56 million in the quarter corresponding to a net margin of 10% and an annualized ROE of 11%. I would now like to give the floor to Márcio Moraes, Even's CEO.
Good morning, everyone. I would like to begin by briefly introducing myself. I joined the company in October last year as a board member, and last May I took over as Even's CEO. I have been in the real estate market for around 44 years, working in construction and development through RFM Group, which I founded with my partners. Last year, RFM signed a joint venture with Even to develop new high-end projects in prime neighborhoods of São Paulo City, working a specific market niche that has been proving highly successful. I am extremely happy about joining Even's team and feeling really enthusiastic about this new challenge in my career. We had a great second quarter with an expressive volume of launches and sales.
Besides a very good absorption of our inventory, our net income in the first half year is already higher than the one delivered in all of last year, and we see clear signs of improvement in the market with expectation of reduction in interest rates. We see some certain stability in construction costs with INCC index around 3% for the last 12 months. Apparently, construction costs should no longer be a problem for the industry in the short term. The changes to the master plan of the city of São Paulo should facilitate the purchase of land in the city, generate new and good opportunities for the industry. We are excited to continue launch, always with a focus on the profitability. Even has a highly qualified land bank built over the years with great high-end projects in greatly desired regions of the city of São Paulo.
We also have excellent operational capacity and a robust balance sheet to execute our projects, take advantage of good opportunities in the real estate market. Thank you again for your presence. We can now move on 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 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 of your questions at once. Let us now proceed to our first question, comes from Pedro Lobato, Sell-Side Analyst from Bradesco BBI. We will now open your microphone so you can ask your question. Please, Pedro, you may proceed.
Good morning, everyone. Thank you for the presentation. Thank you for allowing my question. First question. There is some echo here for me. I do not know if it is clear for you. Is the sound clear? There is some echo. Okay. There are some technical difficulties.
Okay. Here comes the question. The first question is regarding margins. The consolidated figures in the first quarter, it had showed a very good improvement, especially in São Paulo. In the second quarter, we have seen a slightly lower margin. I would like you to explain this in more detail. How you explain this drop in gross margin. The second question regards inventory. We have seen the 20 months worth of sales, the consolidated inventory. I would like to understand your sales strategy, if you are being worried or if you are comfortable with this level of inventory, and how this affects your launch strategy looking forward.
Hello, Pedro. Thank you for your question. Dzik here. I would like to start by talking about the margin. We had an event that is a non-recurring event. The process of the delivery of the Fasano. The residential project we had already delivered, but delivering the hotel is a very complex issue. We had some increased costs to deliver this hotel, but it is now over. This impacted the result in the second quarter, but this is over. If you do not consider this specific event, we are recovering our margins. We had last year that was really hard, especially because of the sales of emerging segment inventory. We sold all this inventory, and now we have been emphasizing the work on our middle and upper middle and luxury inventory. Now joining with your next question, this is a very new, young inventory.
We have 14% of our inventory, it is concluded. One third of this is Ibis Hotel. It is not really a concluded inventory. It is not on sale. It is not for sale. We have been through a difficult moment during the pandemic, but the hotel business is recovering very well. We had a carryover that is much better. We will see a market environment that is much better to allow us to sell this hotel. So answer our inventory. Our concluded units inventory, when you do not consider Ibis, it is a very low volume, and we had ample time to work on these products.
Thank you, Dzik. Good day.
Thank you, Pedro, for your question. Our next question comes from Matheus Meloni, Sell-Side Analyst from Santander. We will now open your microphone for you to ask your question. You may proceed.
Hello, everyone. Thank you for taking my question. On our side, I would like to understand what you see in this market of São Paulo, especially the high-end luxury markets. If you can give us some update on the Faena project and the Real Park project.
Thank you for your question, Matheus. Márcio answering. In the two aspects, what we see in terms of competition in the high-end luxury market, it is a very active market with a very good absorption. We have unique projects. The profile of our launches are unique. So great common areas, leisure areas, tennis courts. This differentiates our products from other small lots products. This differentiates our projects, allow us to raise more value for it. The competition is not going to harm our sales. We are very confident for next half year. Regarding Faena in the Morumbi. Faena, we are finalizing our projects to launch this.
We have already begun working on the lot, putting up the sales stand, and this will be ready by the end of the year. It is also a very unique project. It is a mix of high luxury hotel, art center, restaurants, and very high-end residential units. I think the performance of this project will be very good. Our Real Park project will probably be for 2024. We are developing the final details to launch this next year.
Thank you.
Thank you, Matheus, for your question. Our next question comes from Hugo Grassi, Sell-Side Analyst from Citibank. We will now open your microphone for you to ask your question. You may proceed.
Gentlemen, good afternoon. Thank you for the result. Thank you for taking my question. I would like to ask you about master plan. What these changes in your mindset?
I see you have been finding a lot of good pieces of land, but if you understand that this new master plan will provide much better opportunities and more flexible possibilities for purchasing land. Will this bring you better opportunities for tactical purchases of land bank? Looking at PSV that you already have, the land bank you already have. If you could quantify somehow what is the potential gain in terms of PSV, even with these projects, if you can file these projects within the new master plan, how this will affect and what kind of pipeline you have in line with this new master plan. If this would delay some launches or if you would prefer to launch anyway or maybe even give it some time between this and next launches, so you can maximize the potential according to this master plan.
Good morning, Hugo. Thank you for your question. Márcio here. The master plan that has been approved, it has been discussed since 2021. One of the items that have just been approved, they were on the agenda, they have just been adjusted, and they were approved this year. What the market understands is that this is pro-business. I think we are studying the opportunities, but this new master plan is still contingent on the new zoning plan, which will actually rule the changes. So we have some land bank lots that we are studying if the performance will improve in light of this master plan, or if we can take some more time before we launch or launch now. We are still studying this. We are depending on the approval of the zoning law, slated to happen by the end of the year.
The market is waiting for the ruling regarding the zoning law, so we can effectively take measures. Right now, from the point of the land bank, the existing land bank, what we can change and gain some value here, we still do not have these figures. We have not calculated this because we are depending on the new law to be approved. For the new land, we are studying it twofold. One, without any significant alterations in the zoning law, and another one, if the zoning law changes things significantly.
Hugo, just complementing Márcio, he was very specific. We are studying this on a product-by-product basis. We have an urban operation, so we do not see any future alterations. It will follow our normal dynamic of approval. For other projects, we are going to try to understand the cost benefit, the potential, and the launch deadline.
Because we have this project within the urban operation axis, which is part of the master plan. So we are going to study these projects case by case.
If I could just to follow up on my question. Does it change anything for you if you consider purchasing through swaps or purchasing cash? Does this new master plan change anything in terms of how you plan on purchasing, in terms of gain of margins?
Hugo. Complementing your first question. The master plan itself, no, it won't change anything. But we have been refining our swap strategy. You can see this in our last purchases. We have been taking some decisions. In our last decisions of purchase, we did that in cash. We are not abandoning our strategy of purchasing through swaps. We are refining this strategy.
We are opportunistically choosing some lots and understanding the best timing, the best moment to buy this through swap. It's not related to the master plan. It's regardless of the new master plan. We have already made some purchases in cash, for example, last year, to optimize our swap model in terms of deadline and in terms of the right moment to bring in this investor with a better interest rate.
Thank you. Thank you for your answer.
Thank you for your question. Our next question comes from Elvis Credendio, Sell-Side Analyst from BTG Pactual. We'll now open your microphone for you to ask your question. Please, you may proceed.
Good morning, Márcio. Good morning, Dzik. Two questions here. First is regarding demand and the appetite for launches on your side.
Apparently, we see an improvement in the market, but it seems to me it's a little early to tell, but if you see this is going to affect demand, if this would change the company's strategy in terms of volume of launches looking forward. If you're going to have more appetite to speed up these launches, especially this new partnership with RFM. The second question regards concerns cost of construction and margins. This has decelerated quite a while. I don't know how this has been translating to you in terms of the cost of materials and construction work. If you can see some savings in construction work in these coming years.
Thank you for the question, Elvis. I will talk about launches first. Márcio will talk about the costs. As you well know, we had a very aggressive environment in 2022.
We went through this very high interest rate, elections, the war. The end of last year, especially. The first quarter in this year in São Paulo, we did not launch anything, but we had a good surprise. We have seen the market responding well. Regarding the demand, we see the demand is stronger than we imagined in the beginning of the year, and this gives us a very good environment to launch in the second half of the year. We have a very big land bank. We have lots that are already in condition to be approved, and this is an effective, good environment to retake launches. In this quarter, we increased our launches, and we are optimistic. The SoS has been very good, over 40%. We see a very positive environment for more launches.
Concerning volume and the number of projects, it will depend on the maintenance of this environment and the results we will have. We are also following up on our remaining inventory. The first cut in basic interest rates we have seen now, so we are excited about this. We are working with very large projects. Faena is one of those. Márcio talked about it.
Elvis, good morning. Márcio here. Just to complement regarding construction costs. It has been stable for the last 12 months, around 3%, measured by INCC index. We do not see, looking forward, any change in this, because basically construction costs is extremely related to the cost of commodities, energy, which is a very important commodity for our cost. We do not see an increase in cost for the energy. It's raining a lot. Our reservoirs are full.
The wind energy, the solar energy, we do not see any problems on the energy side. The dollar, and we see the dollar stable for next year. We do not see any bumps in this, and inflation is going down. If these assumptions do not change, the construction costs will stay stable, and this is not going to change our costs right now.
Thank you. It is clear. Thank you for your answer.
Thank you for your question. We remind you to ask questions, you must click on the Q&A icon at the bottom of your screen and type in your question to join the line. When you are called, a request to activate your microphone will show on the screen. You will then need to activate your microphone to ask your question. We advise you to ask all of your questions at once.
The Q&A session is now closed. We would like now to give the floor back to the company for their final remarks. Please, Mr. Marcelo Dzik, you may proceed.
I would like to thank you all for attending this call. Analysts, investors, partners, collaborators. We are very optimistic and enthusiastic about the company's results. Our investor relations team, Tiago and Mariana, are at your disposal for any further questions you may have. Thank you very much.
Even's earnings call concerning the results of the second quarter of 2023 is now concluded. The investor relations department is at your disposal to answer any further questions you may have. Thank you all to all the attendees, and we wish you a nice day.