Ladies and gentlemen, good morning. Welcome to Lavvi conference call to discuss the results for the fourth quarter of 2024. We would like to inform that all participants will be in listen-only mode during the presentation will be addressed by Ralph Horn, CEO, Sandra Attie, CFO, and Maria Luiza Oliveira , IR Manager. This call represented in English with simultaneous interpretation into Portuguese. To change the audio, you can press the globe icon on the lower right side of your Zoom screen and choose enter the Portuguese room, and then you can select mute original audio. You can also choose English. The slides will be available at the company's website.
Before proceeding, all participants will be in listen-only mode during the presentation, and then we are going to start a questions- and- answer session when further instructions will be provided. Before proceeding, we would like to say that forward-looking statements are based on the beliefs and assumptions of Lavvi's management and on information currently available to the company. 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. Investors, analysts, and journalists should understand that general economic conditions related to macroeconomic scenario and also the industry may lead results to be materially different from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Ralph Horn. Please, Mr. Horn, you may start.
Good morning, everyone. I would like to thank you all for being here. It's an honor to have you here in our conference call to address the results of the fourth quarter of 2024 for Lavvi. Once again, we are very happy with the company's performance. Despite the challenging scenario, this has been the best quarter and year ever in terms of launches and sales. We increased launches more than 90% and sales above 100% in our share. We had the records in the main three lines of accounting results, in revenue, gross profit, and net income. This quarter, Heaven was a very successful launch in an excellent region. We have two buildings, one with smaller apartments that sold out very quickly, and another one with bigger apartments that also took off very well.
Gross margin was flat, and net margin was very healthy. We also paid out dividends to our shareholders, both in Q4 and now in the beginning of the year. We were beyond the minimum mandatory and paid an extra amount accounting to BRL 0.98 per share referring to 2024. We also raised our corporate CRI amounting to BRL 202 million in order to purchase real estate properties and to keep a robust cash position. Thank you all very much. Now I'll give the floor over to Sandra to address the operational results.
Good morning, Ralph. Good morning, everyone. Thank you once again for being here. This has been really an exceptional quarter, the best ever in terms of launches and sales and SOS. We launched to BRL 1.6 billion and 100% on BRL 900 in Lavvi's percentage. We had BRL 867 million in our percentage closing 12 months with 60%. Our inventory went down and landbank increased. We have this launch in a very good location in Brazil in a region that didn't have so many launches. This is 1.2 potential PSV project. Two buildings, one with smaller flats and studios, and another one with bigger apartments, 260 sq m.
On the launch, we had 65% sales, almost selling out the building with smaller flats. Another launch with Cyrela, this managed by them. We are minority shareholders here. It was launched in the District of Perdizes in the City of São Paulo, only the residential building with apartments of almost 360 sq m. It is 70% sold out in Q4. The studio building was launched in the following quarter, also very successful. This is the second launch of the Novvo brand. We have 397 units, My Home , My Life, Range 3, and we have 75% sold out. Very successful and we are excited to continue selling in the My Home , My Life , the low income segment. Now we open the second phase of this investment.
On slide number eight, you can see the significant growth of launches and sales in the last quarter, and also if you compare year-on-year. In the year, we almost doubled the SOS and the PSV, and we more than doubled the SOS. 115% growth in sales year-on-year. Our SOS trajectory in the last few months has been high quarter-on-quarter. In this manner, on slide 10, you can see our inventory growing just 10% or 5% of Lavvi's percentage or share, despite the strong rate of launches. So the ready-to-sell inventory is less than 80%, and 50% of our inventory is related to projects that were launched in 2024.
At the top, on the right-hand side, you can see the sales index delivery year. They are almost 80% sold for 2025, 2026, and 2027. Now, on the next slide, talking about deliveries, we had the delivery of Grand Vitrali, a studio building in São Paulo with different sizes units. Then, we have already sold 98% of the units that needed settlement. We still have 13 units in inventory and another eight units in transfer. Customers were surprised with the investment, and they approved the quality with 48% acceptance in the first inspection. On slide 12, you can see our land bank. We have acquired an area of 40,000 sq m in partnership with Cyrela, with BRL 3.5 billion potential sales. So it is bought with cash diluted in seven years. We have a land bank of BRL 8 billion or BRL 5.1 billion in terms of Lavvi's share.
Note that we have no property for the pure medium segment that we believe is the segment that today is unassisted in terms of credit and affordability, considering that they do not yet have access to the subsidized rates of Minha Casa, Minha Vida, and they do not have so much income to pay very high interest rates. Now, I would like to give the floor to [Maria] to talk about the financial results.
Good morning, Sandra. Thank you so much. Starting on slide 14, you can see that the great operational results are reflected in our financials with a highlight to the net revenue that grew 125% compared to the quarter before and 72% year-on-year. We have reached the revenue of BRL 1.5 billion, a record level of the company. Gross margin adjusted by interest was 37.6% in the quarter, 35.5% for the whole year, 1.5 percentage points increase compared to the same period the year before. Net income reached BRL 120 million in Q4 2024, and BRL 343 million in the year with a net margin of 22.1%. This led to our ROE of 25%. Looking at the future revenues, we already have a backlog of BRL 2.4 billion with a margin very close to that of 2024.
We have generated BRL 115 million cash in the quarter and BRL 100 million in the year, and we closed the period with a net cash of BRL 129 million. Going to slide 15, you can see that our revenue has been growing 72% in 2024, reaching BRL 1.5 billion. In the same period, the adjusted gross profit reached BRL 449 million, with a slight increase in the margin compared to 2023. In terms of our investment income, still positive. The drop is a result of the impact of the booking of interest rates resulting from the two issuances of corporate CRI raised by the company.
SG&A, despite the increase in percentage in terms of share compared year-to-year, they are stable. Lastly, our net income was BRL 343 million in the year with a net margin of 22.1%. On slide 16, you can see the comparison with 2023 and since our IPO. So revenue, profit, and margin have grown consistently over the last few years. On slide 17, you can see a growth of 2 percentage points in ROE versus the previous quarter and 6 points growth compared to Q4 2023.
On slide 18, or the last column, you can see the backlog revenue totaling BRL 2.4 billion, result of actual sales that will be booked in our bottom line along the future years as the construction progresses, considering a 35.1% margin that will generate for the company approximately BRL 800 million gross profit in the future. On slide 19, we closed the period BRL 129 million net cash, with a net debt over equity ratio - 4.7. This reflects that the company has more cash than debt, even despite our CRI operation 2024. The company has generated BRL 100 million cash in 2024, despite paying the land using the amount of BRL 272 million. Cash generation very much in Q4, especially because of a higher SOS and a shorter receivable schedule, especially in Q4 for the Heaven project.
In closing now on our last slide, we are talking about the BRL 80 million dividends paid by the company in 2025. During the year of 2024, we have paid out the equivalent of 59% of the adjusted net income. The company always seeks to pay out the minimum that is mandatory every quarter. In closing, we already have BRL 705 million in value generation that have been paid out to shareholders since 2021. Thank you very much for your attention. Now we are open for our questions and answers.
If you want to ask any question, it is in the lower part of your screen, and please type your question. If you need to ask a question on the microphone. Our first question comes from Ana Júlia, from UBS. Ana Júlia, please.
Good morning. Thank you very much. We would like to understand more about the competition in São Paulo. As you can see, there is a competition in the beginning of this year. If you could share with us how much you have in cash, thinking of 2026, and the purchase process, more cash, more swaps. The second swap and the second question is related to funding. Then we have the corporate plans. Do you have any funding? What were the discussions and what is the average rate? Thank you so much.
Good morning. Thank you so much, Ana Júlia. This is Ralph. This year, we're ending a few negotiations of mid and high level properties that started last year. It's not easy to find these properties. It's always difficult, in my opinion, 70% of the market. So in My Home My Life. We are dedicating more than mid and high. This might be an opportunity for us with less competition. It's not easy to find. Then this is something that has been going on, and we'll keep looking. Anything else about funding? Is there anything else that I did not answer?
No, this is great. This is funding.
Hello, Ana Júlia. This is Sandra. On funding, we are almost closing the corporate plan for our two launches. We have limited and the banks being more selective, choosing the companies that are more sound with a sounder balance. This year, we are seeing that the rates have gone way up, and that rates are way up and they're close to the CDI, but we will continue closing with these banks. But we still believe in the flexibility of those lines. But probably we're still going to have more increases in the future, and then we are going to decide where it's a corporate plan or we are going to have access to the capitals market. That today it's favorable for more debts and to then supply the funding deficients in terms of SBPE.
T hank you so much. Have a good day.
Our next question comes from Rafael Rehder from Safra .
Good morning, everyone. Thank you very much for taking my questions. What is your launches mix for the year, and what will be the share of Novvo, of the overall numbers? Then just an update on Q1. Could you share something with us, in terms of customers visiting your sales booths? Has anything changed considering the macroeconomic scenario, or is it the same as last year?
Good morning, Rafael. I'm going to start answering your question then Ralph is going to complement. About launches in the year, we have BRL 2.5 billion launches planned. BRL 2.5 billion and BRL 2 billion for a mid and high and 520% in My Home , My Life of the BRL 2 billion. Now we have in Q1, Klabin. Then in Q2 we have Cubatão. In Q2, in the second half we have half of the Hípica land.
As to customers. In terms of inventory, we had two good months as a result of launches of last year. But we feel that with interest rates so high, in high standards, they're not buying in a hurry. Of course, interest rates are going to be a problem for us this year. They're going to affect us. We need to negotiate intensely with customers. This is our feeling in the beginning of the year.
Thank you very much, Ralph and Sandra. Thank you so much.
Our next question comes from Herman Lee from Bradesco BBI. Mr. Lee, you may ask your question.
Thank you so much for the space. I have two questions. Can you share us a little bit about your deliveries this year? I think that will be a significant amount. How is this going to impact cash? Can you give us an update on Elie Saab project in terms of sales?
Hi, Herman. About deliveries, we have five projects, almost 2,000 units to give Ipiranga Villa, High Vernon Green, and Green is right at the end of the year. It might be just next year because it is December, January, but almost 2,000 units. We still have about BRL 500 million to receive from those projects in terms of outstanding balance and SFH, the debt that we need to pay when received. All of this is already reflected in the cash generation that we are projecting. Last year, just recently, we said that we generated BRL 100 million cash, and this year we are practically flat. Last year, two years in 2024, 2025, we were going to burn BRL 150 million, so it is much better. But this year it is almost flat. About Saffire, Ralph is going to say.
Well, Saffire, I think last year we sold about seven units. It is 70% sold. This is very good. It is still demand, but there is intense negotiation. Sometimes it takes two up to four months with proposals and negotiations. The product is very good. Now 360 units are almost sold out, but now we are only left with the 500, the bigger units.
As a reminder, if you want to ask a question, please press the Q&A icon on the lower part of your screen to ask the questions. If you want to ask a question using the microphone, please click on Raise Hand. Our next question comes from Elvis Credendio from BTG Pactual.
Thank you, Ralph and Sandra. We have two questions here. The first one is about credit conditions. You have just said, and they are very careful and there is something about cash generation. Then you have the cash generation in 2025. I would like to understand from you what you are thinking in terms of dividends and payout of dividends. If maybe you should think of an increase in payout, whether you are more careful considering the Selic. What do you think about the allocation of capital? Thank you so much.
Good morning, Elvis. Thank you for the questions. About customer credit. The last delivery that we have had, Grand Vitrali, it was a previous wave, interest rates 11%, and it was really okay in terms of transfer. Now, in my understand, this year, this is really a turning point in terms of interest rates for individuals have gone way up. Some banks are talking about 13.6%, depending on the kind of customer. But we are not so worried. We are going to feel the first problem in Ipiranga that we are going to transfer now. As we have a very healthy portfolio within RPV of 40%, we believe that despite the higher interest rates, we are going to sell. Wonder Ipiranga is going to start now, but actually already have.
It is well advanced and there is a fraction. What is left, there is 1/3 of the units that have already gone through credit and they are solved, and we are going to work on the other ones in order to be able to solve and transfer everything as we have been doing.
As to cash generation, the BRL 100 million last year that we generated, this year, the generation is going to be flat in terms of generation. About payout, we want to pay out 25%, which is the mandatory minimum every quarter.
Last year, we had more than that. We paid out 59%. Since the IPO, we have paid out BRL 3.5 per share. This demonstrates our likelihood to pay out dividends. We want to do it, of course, but we are looking at the cash surplus in terms of the cash flow. It is like a movie that we see looking into the future to see how we are going to allocate the surplus. The company likes to pay out dividends, but we need to analyze cash flow to make the decisions.
Thank you very much, Sandra. Our next question comes from Ruan Argenton from XP. Please, Mr. Argenton, you may ask your question.
Hello. Good morning. Thank you for the space. I have two questions to ask. The first question is about gross margin. There has been a significant growth this quarter, and there is a little bit of the reduction of the accounting effect. The margins from Heaven have helped too. What about your margins in the launches? How much margin are you seeing in the products that you are launching, and how do you expect the gross margin to behave looking into the future?
Question number two is about the short schedule. This has helped in terms of cash generation. What do you see? How much can you add the percentage of sales in that schedule, and how much has this changed the percentage of your LTV? Has this helped you?
I am going to first answer about gross margin, and then Sandra is going to answer. What we see in terms of gross margin is really, this is slightly above our REF margin, which is 35%, and then we see 37% in the quarter. 26% is going to be a mix between our REF, that is 35%, a little bit of inventory sales of our REF margin and the launches margin. Deep down, we believe the backlog margin is going to be very close to 2025 because we need to consider all the factors.
Thank you so much.
This is going to depend very much on our sales mix. We have products driving the backlog margin up and some products are slightly below. It depends very much on the mix. About the short table, it is not just an effect of our REF. Since 2021, 2022, Selic and INCC was really exploding, and we had to buy on the short term. They steal the hedge from the construction inflation, but they are going to buy in advance. The normal is 37.3% after KIs. We have 38, 40% LTV because of a shorter flow. When they buy, we give them a greater discount when they purchase, which is bigger than discount after they are already with us and they want to advance one installment.
This helps in sales because they have the perception that they are buying a lower price per footage, and it's a much healthier portfolio. This portfolio will bear the transfers with these raised very, very high rates. With the interest rate as high as it is, we are going to have fewer proposers with advanced cash. They prefer to leave the money in Selic yielding. We are going to reduce slightly the advance rate. It used to be 6%, but we are thinking of 7.5%. They are thinking very much of Selic. Of course, interest rate is always a problem for everything. It really affects us.
Great. Very clear. Thank you so much.
As a reminder, if you want to ask a question, please click on the Q&A on the lower part of your screen and type your question. If you want to ask a question using the microphone, please click on the raise hand button. Our next question comes from Heloisa Cruz from Stoxos. Please, Ms. Cruz, you may ask your question.
Good morning. Congratulations on your result. I have two questions. The first one is about INCC or the inflation, construction inflation. How do you see the price increases? Can you tell us a little bit which region in the City of São Paulo breakdown, if there is any region that is slightly better considering the products that you launched that are different depending on the region? Congratulations on your results.
Good morning. Hello, this is Sandra. About the construction inflation. There is some pressure, cost pressure for concrete, cement, bricks. The construction inflation is taking this increase. Steel has gone down a little bit, but the most important is that the gap with the construction inflation is not too big. If the INCC identifies all the price fluctuations, this is going to be aligned with the INCC, and so will our portfolio, and we will be hedged. This is very much in line with INCC, and there is a difference between the real cost and the index, the INCC.
In some districts, the most high-end parts of the City of São Paulo, we can offer good prices and good quality leisure. We've been seeing a good SOS. The medium-high, like Moema, Vila Mariana, Klabin, these are the regions of the city. We bought another plot of land in the District of Brooklin in São Paulo.
Any good neighborhood where you can offer a product that has good quality. São Paulo is a very big city. Each district is different. 90% are different people. There are different neighborhoods. Our market in São Paulo is very regionalized. For My Home , My Life they are at good locations. People analyze everything. There are many options today we launched a product. In a certain region at a very good property, and then compare to considering security and everything. My Home , My Life market is not people who will buy whatever. Now they are analyzing the product to choose.
Thank you so much.
As a reminder to ask a question, please click on the Q&A icon that is in the lower portion of your screen, and type your question. If you want to ask your questions by audio, please click on the raise hand button. Our questions and answers session has now ended. We would like to turn the floor to Mr. Ralph Horn for his closing remarks.
Thank you very much, everyone. This year, we find it is going to be a challenge because of the interest rate, but we are excited, especially in medium and high, because most of the market is the low income, and operations require less money. They are less money intensive, and there is much less working capital. So we are very excited with last year's results. They were really great. There is a motivation. We are very excited in terms of pursuing and keeping the results of last year. Thank you all very much.
Lavvi's conference call has now ended. Thank you very much for your participation, and have a good day.