Good morning, everyone. Welcome to Lavvi's conference call to announce the results of the fourth quarter of 2025. The presentation and comments are going to be presented by Ralph Horn, CEO, Sandra Attie, CFO, and Vitor Charak, IR coordinator. The call will be presented in English with simultaneous translation into Portuguese. To change the audio, you can press the globe icon on the lower right-hand side of your Zoom screen and then choose Portuguese or English. This conference call recording will be available at the company's investor website, where you can download the presentation and the slide deck too. Participants will be connected in listen-only mode, and then we are going to have a Q&A session when further instructions will be provided. Before proceeding, forward-looking statements are based on information currently available to the company and on beliefs and assumptions of Lavvi.
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. Analysts and investors should consider that they depend on the macroeconomic scenario and other factors that may lead results to be materially different from those expressed in forward-looking statements. Now, we are going to start the presentation, giving the floor to Mr. Ralph Horn.
Good morning, everyone. I would like to thank you for being here. It's always an honor to have you here to talk about Lavvi's results for the fourth quarter of 2025. We are very happy with Lavvi's performance in this fourth quarter. We had three new launches in addition to the second phase of Novvo Vila Prudente. We started with the launch of Casa Cerâmica in São Caetano, an absolute success.
It sold out very quickly, and there was even a queue to buy. Then we launched Novvo Anália Franco. That did very well. Finally, we had Zen with Cyrela in Moema, which is 40% sold today. On the operational front, it was the second-best year in Lavvi's history. Regarding our accounting records in 2025, we had records in the lines of revenue, gross profit and net income. This year, we burned cash as a result of relevant investments in land. I want to thank everyone for their presence. We had many launches in 2026. In October, we raised BRL 400 million, and then we strengthened our gross cash to keep buying land. Now we are getting ready to the biggest launch, the biggest one in São Paulo, which is the Hípica project. We had a meeting yesterday. There were lots of people, from 700 and 800 brokers.
Now we have a little bit more than BRL 1.3 billion PSV and 1,060 units. In 2026, it's going to be a very challenging year. Things are not easy. Interest rates are high. The world is complicated with World Cup elections. But as usual, we are going to follow the market very closely and make the best decision at each time for each launch to reach the best results of the company. Thank you very much, all shareholders and analysts. Now I would like to give the floor to Sandra for the operational results.
Thank you, Ralph. Good morning, everyone, and thank you for the presence. About the launches, on slide five, there is the Novvo Vila Prudente. We opened the second phase, and we booked the entire project in the fourth quarter. We have a plot of more than 4,000 sq m, 900 units, and BRL 275 million of potential PSV.
Here you can see the pool and the rooftop with an open-air cinema theater. Today, we have almost 50% of sales. We launched in a partnership, Casa Cerâmica in São Caetano, the first project of Lavvi outside the capital, a differentiated plot of land, a very large plot of land, differentiated product. Three towers with apartments with 130 sq m , 170 sq m , 142 sq m , full leisure, and services provided by CBRE. The product really attracted people in almost one month with [inaudible ]. On slide seven, another Minha Casa, Minha Vida project, very close to the shopping mall with almost 600 units and BRL 178 million PSV. We had [inaudible] sold, and today we have 58%. With the [inaudible] project, low income for Novvo brand has become more relevant with a larger share in our businesses. We are excited to keep operating on this segment with new plots of land.
On the last launch of the quarter in partnership and under the management of Cyrela, Zen in Moema, right in front of Club Ipê , with a PSV of BRL 681 million. We had a great quarter and year in terms of launches and sales, as you can see on slide number nine. In the quarter, we launched BRL 1.8 billion PSV, and we sold BRL 1.4 billion. Comparing to 2024, in terms of launches and sales, we had a slight drop of 11% and 15%. As a reminder, in 2024, we had three launches have been delayed from 2023, which raised the level of the year. Our VSO was 32%, the best quarter in the year. If we consider the last 12 months, our VSO is still above 50%.
Now, moving to slide 11, you can see the evolution and the breakdown of our inventory per season of delivery and stage of the project. As you see, we launched BRL 1.8 billion PSV in the quarter. Senior management knows how important it is to keep the inventory under control, negotiations in the way, and works intensely to try and solve any problems that may arise. On slides 13 and 14, you can see the deliveries of 4Q, High Wonder and Verdant. Both projects were launched in 2022, and they were very well sold at first. In November, December, we delivered them, and today we have only units for High Wonder and Verdant. We already have 90% of those two ventures sold between transfers and settlements. Considering our portfolio, it was not difficult to approve the credit of our customers at the bank and to solve this portfolio.
Now, moving to slide 15, you can see the land bank breaking down Minha Casa, Minha Vida and Middle and High and Luxury. We have BRL 5.9 billion in the percentage, 16% in our share. For the brand Novvo. We have negotiations to buy new plots of land for both brands to complete the pipeline from 2027 onwards. Now, I would like to give the floor to Vitor for the financial results.
Thank you, Sandra. Good morning, everyone. Starting on slide 17 with the financial highlights of the fourth quarter of 2025. Net revenue was BRL 530 million in the quarter, 8% below 4Q 2024. In the year, we had a 14% year-on-year increase, a record for Lavvi. The adjusted gross margin was 35.5% in the quarter and 37% in the year, 1.5 percentage point above 2024.
As a result, net income reached BRL 205 million in the quarter and BRL 414 million in the year with a net margin of 23.5%. Our ROE was 28%. Backlog grew 19% compared to the same period the previous year. This quarter, we had cash burn in the amount of BRL 45 million. In the year, we burned BRL 119 million cash, and we would have generated BRL 372 million without investments in land. Finally, we ended the quarter with a net debt of BRL 394 million . In addition to these results, on slide 18 on the right, we have the financial result. This positive change is a reflection of more robust cross-cash flow and a higher Selic rate in 4Q. At the bottom of the slide, starting with G&A, we see that reflects the company's growth and investments in systems and improvements.
Despite a nominal increase, we managed to remain practically stable in terms of percentage in net revenue. In commercial expenses, we increased 23% in the quarter, 4% in the year. Finally, net income in the quarter was 13% below 4Q 2024. In the year, net income reached BRL 414 million , a record for Lavvi, and 21% above 2024. On slide 19, we see a constant growth of net revenue and net income year-on-year, with above 20% since the IPO. In slide 20, you can see the ROE of 28%, proving resilience. Next slide, you can see backlog revenue totaling BRL 2.8 billion , up 19% against the previous year, driven by launches. The 37.5% margins implies more than BRL 1 billion gross profit to come. On slide 22, this quarter the company burned BRL 45 million cash, which would be a generation of BRL 53 million discount investments in land.
In the year, we burned BRL 119 million cash and generated BRL 372 million in the ex-land view. Now, slide 23, on March 27, we are going to pay the first installment of dividends as decided in January of retained earnings reserves. We have exceeded the mark of BRL 1 billion pay in value generation paid out to shareholders since 2021. Thank you very much for your attendance. Now we are open for questions.
Now we are going to start the questions and answers. If you want to ask a question, please click on the Q&A icon at the bottom of your screen and type your question. If you want to ask the questions with a microphone, please click on the raise hand. Our first question comes from Bradesco BBI. Now your microphone is open. Please, you can ask your question.
Good morning, team. Thank you very much for the space. I have two questions. First, related to commercial expenses. They are slightly higher in Q4 and very much related to Casa Cerâmica. Could you give us more color on which were these additional expenses and if the commercial expenses will remain at the same levels. An update about the Hípica and what you expect in sales when the project is launched.
Hi, this is Sandra. I am going to talk about commercial expenses and then Ralph will talk about Hípica. [inaudible] was Casa Cerâmica. The usual expenses is the marketing, advertising, everything that is necessary for a launch. Usually, these expenses come six months before launch. What happened for Casa Cerâmica, that we started Q4, as partners of the venture, and then we only got to know about incurred expenses in this quarter. That is why it is concentrated in that quarter. That is why it is high.
Hípica is the following. For Hípica, we have the meeting Tuesday night. We have been for two months working with brokers. The opening of the work will be on Saturday, and then we are going to open, decorate it, and we are going to start the first phase. We would like to sell 25% of the project by July this year. Too early to talk. Many brokers are joining, and the game has only just started. We are very excited, but it is too early to say anything.
It is very clear, Sandra, Ralph. Have a good day.
Our next question comes from Gustavo Fabris from BTG. Gustavo, please, you may ask your question.
Good morning. Two questions. First, for the gross margin performance, which is the highlight of the quarter that dropped a little bit quarter-on-quarter and year-on-year. Could you give us more details of what is underlying this? If you look at the REF margin, it has increased because of mix of projects that are delivered because REF margin. Can you see the accounting margin for 2026 going up, very much related to new projects with higher margins that contribute to the result?
The second one is about inventory, especially ready units, the specific Villa Versace that concentrates most of your inventory. Could you give us your vision and how do you see this project? What has already been delivered, if you are worried, would you try to be more aggressive in sales and reducing margins to monetize inventory faster?
Good morning, Gustavo. Thank you very much about the question. About the gross margin this quarter, we adjusted the cost of the projects that we are going to deliver. There is a shortage in labor, and we are within the waiting period another two or three months. Sometimes we need to reverse part of the revenue. We have this impact on the gross margin. About the performed receivables and the margin, there are some projects from 2022 whose margin is suffering more, and they are being delivered now. Once we zero the inventory, it gets out from the margin, and we replace it for other projects that we have been launching more recently with better margins. The margin is likely to go up.
Hello, Gustavo. Inventory is something that we are really concerned about. We are very organized in our. For Villa Versace, we could not work last year because of construction delays, and we were in a hurry to transfer everybody so that we could start if we had to say, at a slightly lower price, not to cause any problem with previous sales. We are seeing many people. This year we have already sold the studios. I think we have three or four. We have 18 still large. There will be a bonus. It is something that we are monitoring closely. It is difficult to say, much harder worker. We are monitoring it closely. This is what we can do. We are going to monitor it closely to sell the inventory. We do not like inventory.
If we need to lower prices, we will, and we are going to get to amounts that will give us liquidity. But for a high standard, it is not about lowering prices, it is about their liking. It takes a while for them to mature the idea. There are many offers. They see many projects. This year we want to zero Villa Versace.
Perfect. Thank you. Thank you very much.
Our next question comes from Elvis Credendio from Itaú BBA. Mr. Credendio, you may ask your question please.
Good morning, Ralph and Sandra and Vitor. I have two questions. First, about the pipeline of projects this year. Is there any project that you are more excited about? Is there anything else that you are more excited about? Also, in that sense, what about the approvals of permits? Can it affect the pipeline? The second item is about the market as a whole. We have heard news of a higher inventory in São Paulo, especially high standard units. There is a growing volume, but sales volume is still high. The number does not seem to be too high. Are you worried about that? This may change a little bit your launch strategy, and what you see in terms of competition with that regard.
Hi, good morning. First, we have a very extensive pipeline for this year. For Novvo, we are launching Novvo Santa Marina, which is right across from the subway station. The first phase with 400 units, phase two next year, because we are decontaminating the land. We have Hípica, a huge project that is coming out now. We also have Clodomiro Amazonas, high standard for this year. We have another in Paraíso Studio, right close to HC. We were very successful in Le Six . We bought a new plot of land to repeat that.
Also, we have a big project in Moema, almost BRL 800 million PSV. We have another low income, and we might try and have another one close to Novvo Anália Franco. We have quite a few projects. As to permits, what is with the city may affect, most does not affect because I am at a phase that this makes no difference. The only thing is that there is one or two that the city has canceled 100% of the permits for demolition. They are not giving any permits. This might affect, but most of them, we are still in the phase that this does not affect. This affects the market, and there is not much to go into the future. January and February, we think that the market is good, especially Minha Casa, Minha Vida, lots of liquidity, and we want to sell at least BRL 100 million.
We have reached that in January and February, and January is a very difficult month with the summer vacation. This February is Carnival, but the market is active. Even though the interest rate is very high, we have very good products. Minha Casa, Minha Vida, we have one with lots of inventory. It sold 18. Now with a little bit more liquidity. For each inventory, we have a product manager that looks after it, looking after what happens in the weekend. We really want to sell because sale of inventory means cash.
Our next question comes from Ygor Altero from XP. Ygor, you may ask your question, please.
Good morning. I am going to follow up on the permits. As to the timing, how long do you think it might take? The second question is more related to low income. How are launches evolving in terms of share because low income will win overall? Which are the challenges that you are seeing? What are the lessons learned? This is what I wanted to know. Thank you very much.
As to the permits, we think that we are going to solve that this month. I think that the city and the legislative branch have decided because this affects everybody. As to Minha Casa, Minha Vida, we are very excited with lots of liquidity. Minha Casa, Minha Vida is under production. We still need more labor. We are going to extend delivery times. For Minha Casa, Minha Vida, it's going to be six months, but we are really racing. The challenge of the industry is that many construction companies are failing to launch and not launching everything that they could. The challenge is in production.
We still have a problem with the lack of labor should not be solved in the short term. The new law of six by one might make matters even worse for us, but the market is very warmed up. Lots of people to buy the product. I think it's still good, but we are going to adapt to new terms, new times, and to the reality.
Just a follow-up as to the 6x1 work shift. Is this going to impact labor?
I can ask engineering department. I don't have it at the top of my head. Usually 40% is labor of the total cost of a development.
Thank you very much.
As a reminder, if you want to ask a question using the microphone, just click on the raise hand button. If you want to post your question in writing, use the Q&A icon. The question- and- answer session has now ended. We would like to turn it over to Mr. Ralph Horn for his closing remarks.
Thank you very much, everyone. We are very excited as usual. The company is growing. We are digitizing the company more and more internally. We are very excited with the market, and we expect to be able to deliver better results this year than last year. Thank you all very much.
We are now ending our conference call. We thank you all very much for your attendance and wish you a very good day.