Good morning, everyone. Welcome to the conference call of Lavvi to announce the results of the first quarter of 2026. The presentation and comments about their performance are going to be presented by Ralph Horn, CEO, Sandra Attié, CFO, and Naira Pesce, Investor Relations Manager. There will be simultaneous interpretation available at Zoom. To access, please click on the interpretation icon at the bottom of your Zoom screen and choose your preferred language. This conference call is being recorded and will be available at the company's investor relations website at www.ri.lavvi.com.br along with the slide deck. All participants will be connected in listen only mode during the company's presentation, and then we are going to start a questions- and- answers session when further instructions will be provided.
Before continuing, we would like to say that forward-looking statements are based on beliefs and assumptions of Lavvi's management and are also based on information currently available to the company. Forward-looking statements 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, analysts and journalists should understand that events related to the macroeconomic scenario, industry conditions and other operating factors may also lead results to be materially different from those expressed in such forward-looking statements. We are now going to start the presentation, giving the conference over to Mr. Ralph Horn. Mr. Horn, please, the floor is yours.
Good morning, everyone. I would like to thank you all for being here.
It's an honor to have you here in this conference call to talk about the results of Lavvi in the first quarter of 2026. The first quarter was a period essentially dedicated to preparing future launches. We focused on warming up the launches for the second half quarter, Jardim da Hípica, and in the same month, we sold almost 50%, reinforcing our strategy of selling well at the start. In a quarter without deliveries and launches, we had good commercial dynamic with net sales of BRL 336 million overall, which contributed to the reduction of inventory. SoS for the last 12 months remained at 54, reflecting quality and maturity of the portfolio. On the financial side, the quarter's results were timid but due to the absence of launches.
The fact that margins are under pressure this quarter is a one-off event and should be reversed in the second half of the year. In the last 12 months, indicators demonstrate stability or growth. The annualized ROE 28%, reinforcing the company's consistency. As to cash, we burned about BRL 44 million, mainly for investments in land. We bought land with good negotiations, and we had BRL 10.4 billion in potential PSV. We remain optimistic. We are paying attention to INCC monetary impacts, but we are confident. Our receivables portfolio is corrected by the same index, functioning as a natural hedge. Thank you all, shareholders. Now I'll give it over to Sandra to talk about the operational results.
Good morning, everyone. Thank you very much for being here. Now starting on slide five.
In fact, we had no launches this quarter, but we prepared for the biggest launch of Lavvi's ever, Jardim da Hípica. It is worthwhile. 40,000 sq m of land plus another 10 sq m of a square. Wonderful and different from anything else in the region. We opened the first phase in less than one month. We sold almost 50%. Going back to the first quarter, we have launches and sales on slide six, zero, but flat as compared to the last 12 months. Note that the low-income segment grew twofold in terms of launches from one year to the other. At the bottom of the slide, you can see sales of the quarter. We are close to BRL 336 million net sales, 1/3 from My Home, My Life . Even though this low-income housing program demonstrated a good performance, we had the same average as last year.
On the right-hand side at the bottom, you can see the cancellations that took place in the quarter. As presented before, there was an increase in the number of units and canceled PSVs. First, we need to separate My Home , My Life from mid and high income with different risk profiles. In the low income, cancellations take place in a very short time, two, three months. They are giving up. In this quarter between Lavvi and partners, we had 57 units from My Home , My Life that were canceled. Considering the liquidity of those projects, we resolved them very fast in one or two months. We still have another 45 units that have been canceled in mid and high income profile. 33 of them are under our management, 12 partners, 11 units per month, which is normal.
Cancellations were pulverized, not concentrated, and did not present any risk for any of our projects. Moving to the next slide, our SoS for the last 12 months was above 50%, always. On slide number 8, the inventory dropped to 12%, closing at BRL 2.5 billion, or BRL 2.1 billion at Lavvi's inventory. Our ready unit is 6% in a single project with higher ticket and a slower speed of sales. In addition to it, other deliveries of 2025 are well solved with an inventory at one digit, as you can see on the table on slide nine. Moving now to slide 10, you can see the land bank. This quarter, we have two new lands, one in the district of Paraíso, and another four, two for low income and two for high income.
We close with BRL 10.4 billion potential PSV or BRL 7.5 billion in our stake, 20% for the low-income segment. The land bank is enough for the launches in 2026, 2027, and partly 2028. Our land bank was acquired 87% cash and 13% through swap. I would like to give it over to Naira, our new Investor Relations Manager, to talk about our investment income.
Thank you very much, Sandra. Good morning. Starting on slide 12, Lavvi's first quarter financial highlights were net revenue of BRL 373 million, which suggested gross margin of 34.9% in the quarter. Net income of BRL 70 million, with a net margin of 18.7%, and ROE of 28%. Looking at future revenues, our backlog is BRL 2.8 billion, with a gross margin of 38%. We had an adjusted cash burn of BRL 44 million. Our generation of BRL 30 million in the ex-land view.
Net debt totals BRL 468 million in March. Now moving to slide 13. In the first chart, you can see the net revenue, BRL 373 million in the quarter, influenced by the absence of new launches, representing the evolution of the percentage of completion of the construction underway. The quarterly comparison was impacted by the launch of Casa Cerâmica in Q4 2025, almost 100% sold. In the comparison of the last 12 months, we have had a growth of 13%, reaching BRL 1.8 billion. In the second chart, the adjusted gross profit totaled BRL 130 million in the quarter, with a margin of approximately 35%. Adjusted gross profit was mainly impacted by the reduction in net revenue in the period. In the last 12 months, we continued to grow the adjusted gross profit, and the margins remain at a healthy level.
At the chart on the right-hand side, we can see the financial result of BRL 6 million in the quarter, pressured by the increase in debt because of the third issuance of CRI. In the first chart, at the bottom of the slide, that is G&A, that is also BRL 29 million. The increase is mainly due to the increase in the number of employees due to the company's growth, in addition to investment in IT and improvement systems. Commercial expenses total BRL 39 million in the quarter, a reduction of 18% compared to the fourth quarter of 2025. Finally, the net income attributable to controlling shareholders was BRL 70 million with a net margin of 18.7%. Excluding seasonality, in the last 12 months, there was a 10% increase in net income, and net margin was flat.
Now, moving to slide 14, you can see an avenue growth and also the net income growth in the annual vision, with net margins above 20% since our IPO. On slide 15 of the presentation, you can see a resilient ROE of 28%. On the next slide, I would like to highlight the backlog. The backlog revenue was BRL 2.8 billion with 38% gross margin. There were sales that will be booked in the future years as construction evolves. The 38% margin implies approximately BRL 1 billion of gross profits to come. On the next slide, at the end of the period, the company burned BRL 44 million cash ex-dividend. Excluding investments in land, there has been a generation of BRL 30 million in cash. Before closing and continue the payouts of dividends on the next slide. The interim dividend payout was approved in January.
The second installment in the amount of BRL 30 million is going to be paid on May 15th to shareholders that had a position February the 2nd, 2026. Thank you very much for your participation. Now we are open for questions- and- answers.
We are now going to start the question- and- answer session. If you want to ask a question, please click on the Q&A icon at the bottom of your screen, and type your question. For questions with a microphone, click on the raise hand button. Our first question comes from Pedro Lobato from Bradesco BBI. Pedro, please, you may ask your question.
Good morning, everyone. Thank you very much for the space. Sandra mentioned the cancellation in the low-income segment. What have you been doing to improve that, and how do you see the growth trajectory of this division? In terms of PSV, now that you launched Hípica. Thinking about the rest of the year, how do you see the land bank of high income? Is there a lot of competition?
Good morning, Pedro Lobato. How are you? For the low-income segment, cancellations is not a problem. We sell very well. We have sold a very high share. The cancellations, they cannot get the loan. It is like a sale that did not happen, and then after they go to the bank, and after they are approved, their loan is approved, there are not so many cancellations. For the very low-income segment, we want to grow. We are being very successful. As to the replacement of the land bank, we still have major projects. We have novelties, and we are really okay until 2028, and we will be able to recover the land bank. It is not easy.
It has never been easy. It has always been difficult. The land, it is difficult. There are lots of people who want to do that. It is always a challenge.
Thank you very much, Ralph .
Our next question comes from João Pedro Rodrigues. João, you may ask your question.
Good morning, everyone. Thank you very much for taking my question. I have two questions. I would like to explore your launch strategy. The sales are going very well. There are projects that have already been launched. Considering that there are many phases, we are going to launch the phases, so that you are going to mute and launch new phases. If the market gets better, you are going to launch several phases at the same time. Is there any engineering challenges of launching a lot and then having to build lots of things?
How do you see the market in the region taking lots of launches? I think that maybe launching too much might have some consequences. And the second question. We have been discussing cost increase in the last few days, because there is a high with the blend. I would like to understand the pressure. This is corrected by the INCC. How do you see this for future launches?
I am going to talk about Hípica. Hípica is a construction that will take five years until it is complete. There is a buffer for any possible delays from suppliers and everything. We are going to start construction now in July. We have divided it into a few phases. Today we have two towers.
We launched very well, with more than 3,000 people coming to see our booth when we could show to São Paulo that this is something different. Now we are going to have a new phase to sell a tower of a small flat. We want to have brokers there, excited with novelty. And we want to sell the first phase because of the 3,000 people. Many of them have already bought, and others are still thinking and deciding. We were able. There are many customers. No customers buy from them without before seeing and coming to see our project. The club and the leisure is really unique, and we have very competitive prices. We are confident in the project. Very good floor plans. Very good.
As to the INCC, we have had very few complaints of customers that are buying, and this might be an item that might be a problem because it is going to be reflected in the next month. We cannot do anything about it. Our prices need to be competitive, and customers want to buy and make an extra effort because we think that our products will value more than the INCC. Of course, we are not going to raise our prices because we want to launch well. They have 10,000 sq m by 25,000 sq m. We have the Global Park that is ready. We are at the range of 15,000, 4,500. This is reality. We cannot do much about it. Have I answered all your questions?
Yes, you have. Thank you so much.
Our next question comes from Gustavo Fabris from BTG .
I have two questions. Could you give us some color for launch margins, especially for high-income projects? I am trying to understand how the margin relates to your inventory margin, and how the mix impacts the gross margin for the end of the year. Number two, how do you see the current level of leverage of the company and what happens in terms of cash generation?
Gustavo, I will talk about margin. There is a managerial margin of 17% in terms of revenue at present value. This is our target. Of course, if we sell, it increases as a flow, it goes down. On average, this is what we have. We have the margin of 28%-0% . We cannot get everything right. Inventory. As time goes by with the 15 CDI and our calculations are always based on the CDI, the trend is for our managerial margin to drop. Now Sandra is going to talk about the accounting aspect.
Hi, Gustavo. Gustavo talked about the margin, ABB, but accounting margin gives new ventures. These new projects have a higher margin above the rest. The trend, even though our margins dropped from last quarter to this quarter, we are likely to go back to our usual margins. To our margin of unearned revenues, and there are things that were launched in 2022 with tighter margins. Whenever I sell the project, PoC and the margins are driven down, and we are likely to go back to levels of the margin of unearned revenues. The second one was cash generation and deleveraging. The levels. Today, we have 28% debt over the bottom line, so this might go up to 30%, 35%, but this is just in the short- term.
Of course, this is going to depend because there is a forecast for sale. It depends on how we buy land. If it gets to 30%, 35%, it is not yet a problem or concern because then it goes back to levels above 25%. On cash generation, it depends very much on how we are going to pay the land in our forecast. For this year, we have delivered just three enterprises that we had sold to a fund and in a delivery. There is some cash generation. Cash generation. It depends on how we pay the land.
Okay, thank you so much.
Our next question comes from Elvis from Itaú BBA. Thank you so much. Your microphone is open. You may ask your question.
First, about inventory sales. How do you see the sale of inventory? Have you come across any challenges regarding the inventory? What do you think about pricing, especially projects where inventory levels are slightly higher? The other question is about pricing. How do you see the price dynamics with price transfers, construction costs? Is there any room for you to increase prices in the future of the inventory and launches, considering construction costs are slightly more stringent?
Hi, Elvis. How are you? Well, as for inventory, we are looking one by one. Wherever okay, we transfer the INCC, and where it is not, we do not, because today we want cash. We want to sell. There are lots of projections, what is worth more to sell slowly forcing lower prices and sell it more expensive against a CDI of 15. Sometimes we lower prices to have more cash. We increase prices, it is not doing well, and then we lower prices.
It is case by case. We can increase if we have good products. If we do not have good products, we are not going to increase. That is why our main concern is to have good products. It is a problem to increase. It is always a problem to increase. This is Brazil, this is the reality, this is what we have to deal with.
Thank you very much, Ralph. Thank you.
Our next question comes from Rafael from Safra. Rafael, you may ask your question, please.
Hello. Good morning. I have two questions, and the first one is about inventory sales. Do you see any difference? I know that the market is slightly more difficult, and there is inventory, or whether it is more uniform. The second is the deliveries of the year, as you said in the conference call. You have lots of projects to deliver in the qualitative, especially in construction and labor, there is a pressure. How are you doing that?
Hello, Rafael. About typology, I can talk about Hípica. Of course, it all depends on the points and sales. In Hípica, 80 and 130 did very well, 170 not so well. It is case by case. It is difficult to say something. Our high and very high-income project does not have very good liquidity. We have in Moema. We still have 20% of the project. There is a competition. Customers are going to all booths trying to negotiate. About the deliveries of the year, we have been delivering with good quality, even though we are late. We have two constructions in the last minute. As we said, we have been paying one, two months of the management fee.
There is a problem of labor, and this is overall, and we do not think we are going to save the problem of labor in the short term. Now we have longer delivery times than before. We have an extra six months for Hípica. We added eight or 10 months, and then customers, in the beginning, they know that it is going to take how long. It is a good surprise if we are able to deliver before. For Hípica, I think we are going to have a good surprise. In addition to engineering, there is a buffer, and we have added a buffer because we are really worried about labor. The planning is already taking into account that we will be short in labor, and we are adopting new systems that will require less labor. Concrete walls require less labor. This system is going to grow.
As labor becomes more scarce, we want to have more solutions that do not require labor.
We have now ended our questions- and- answer session. Now I would like to give the floor to Mr. Horn for his closing remarks.
Thank you very much. Despite the challenge, we are very optimistic. Come to Hípica stand. It's very nice. There is a model. It's different. It's beautiful. It's worthwhile. You must go there. Thank you so much.
Our conference call has now ended. Thank you so much for your attendance, and have a good day.