Good morning. Welcome to Lavvi's conference call to discuss the results for the fourth quarter of 2023. We would like to inform that all participants will be in listen-only mode, and results will be presented by Ralph Horn and Francisco de Paula, Investor Relations Manager. The simultaneous translation tool is available at the platform. To access it, click on the icon interpretation on the lower part of your screen and choose your preferred language. This conference call is being recorded and will be available at the Investor Relations website of the company, www.ri.lavvi.com.br, just as the slide deck that you are going to see. 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 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 take into account that forward-looking statements related to the macroeconomic scenario, industry conditions may lead the results to differ materially from those expressed in such forward-looking statements. Now we are going to start the presentation, giving it over to Mr. Ralph Horn. Mr. Horn, please, you may start.
Good morning, everyone. I would like to thank you for your presence here. It's an honor to have you today with us to announce the results of the fourth quarter of Lavvi for 2023.
We are very happy with the company's performance in the year, both in operations and in terms of accounting. We grew 10% sales despite a lower volume of launches. We launched BRL 1.5 billion and sold BRL 2.5 billion. I would like to highlight the launch of Saffire, a very high standard, which is 55% sold and contributed to the year's performance. We have a new brand of Minha Casa, Minha Vida in Barra Funda, low-income segment. We are very happy with the results, 70% sold in the first phase. The strong results in operations once again led to expressive growth in accounting results. Revenue and net income grew, doubled as compared to 2022.
As usual, we are very active in buying land with two new areas bought, and we ended the year with 5.2 of land bank in our percentage, which is a good volume for this year's and next year's launches.
We are excited to report that just yesterday, we started selling our first launch of the year in Villa Prudente. Beautiful launch. It hit a sales record with very good prospects despite cash burn in the year. We have a good net cash position at the end of the year. Last year, we reported a successful end of our corporate launch amounting to BRL 220 million. This fundraising will make it possible for us to continue with gross cash as we are buying well-positioned land and keeping a conservative management of the debt. With very good products to sell, we want to help our customers, and potential customers at every new launch. Now I would like to give the conference over to Sandra.
Thank you, Ralph. Good morning, everyone. Let's see the operational results. On slide number five, you can see the VSO and sales.
We launched 11% less than in 2022, but we sold 10% more year-on-year in terms of our share. We were going to launch another three projects. Due to different reasons and strategic reasons, we hold to 2024, such as Vila Prudente that we launched yesterday, Roque Petroni, and the last phases of Brás. In this manner, we closed the year BRL 1.5 billion in launches, considering Eden and Casa Eden in partnership with Cyrela. Then we have a luxury in our launch in the low income with Barra Funda. On average, all these launches ended the year with approximately 50% sold. In the year, we sold BRL 1.70 billion with a VSO of 47%, or rather, same PSV. This speed is recurring quarter-on-quarter if you look at the last 12 months, the higher VSO between our comparable peers.
Now moving to slide seven. We had five ready inventory units and now another 12 units of the project Onda, which has received its permit recently. We closed the end of BRL 1.8 billion or BRL 1.4 billion in terms of our share. 50% with regarding to the projects launched in 2023 and another 25% of what was launched in 2022. On the next slide, Wonder in Brás, which was launched in 2020 right after the IPO, had its individual registrations in February. In just one month, it has 87% of the problems financially solved, settled, or transferred. We have 5% in inventory and another 5% in the process of being transferred. In the meeting, 90% of the units had been inspected and accepted with only 3% renegotiations and potential cancellations, and 98% of our customers said they were happy with the delivery.
Once again, we were able to surprise our customers with our delivery. On slide number nine, you can see the land bank. We purchased two plots of land, Cubatão and Paraíso, with BRL 180 million of potential PSV, and Chácara Klabin, BRL 350 million of potential PSV. We closed the year with BRL 6.9 billion in land or BRL 5.2 billion in our share. Everything directed to medium and high standard. This is a good position to support the launches of the next two years in the mid and high, and then we'll focus on refurbishing or replacing the land that we sell. Now we have almost BRL 200 million of potential PSV, and we're still trying to find opportunities without any urgency to make volume. Now, I would like to give it over to Francisco to talk about the financial highlights.
Thank you, Sandra. Good morning, everyone.
I am going to start on slide 11, and I will say how the good operational performance had a very positive reflect on accounting performance. Starting with net revenue, we saw a strong growth of 63%. Starting in net revenue, we see a strong growth of 63%. It led revenues to exceed BRL 900 million a year. This volume reflects sales, which were 10% above the previous year, as Sandra mentioned, but also the booking of the advance of our constructions, which drove our revenues in 2023. The gross margin was 33% or 34.2% in the year, an expansion of half percentage point as compared to 2022. This margin was affected by Saffire, our luxury project.
In a financial result, even though in the year we had a reduction of 19% because of a lower cash balance and lower Selic interest rate after the second half of the year, BRL 55 million is still a positive result and contributed to the year's profit. In terms of expenses, they grew considerably as compared to 2022 and a total of BRL 45 million, both because of the organizational structure of Lavvi and the expenses of Novvo, the brand that we launched this year to go into the low-income segment. This growth is in agreement with what we had planned according to the company's budget for 2023. Additionally, both for general and sales expenses, you can see that in percentages of the net revenue, they have gone down. With commercial expenses, for example, in the middle chart below was 7.3% in 2023 as compared to 11.5% in 2022.
Lastly, as a result of all the effects mentioned and also driven by the excellent performance of adding our net income, reached BRL 88 million in the quarter and BRL 231 million in the year, up by 101%. This 25% margin for the year positions the company as one of the most profitable companies in its sector with an ROE of 19%, the highest ROI in our segment of companies. Now, I'm going to slide 12, where I'm going to talk about the backlog revenue. It grew 15% year-on-year, and the margin is above 35%. The company has a significant margin driver for 2024.
Now, going to slide 13, and once again, looking at the year as a whole, highlighted on the right in cash generation or cash burn, that there was a burn in the year in the adjustable of BRL 202.9 million, reflecting the acquisitions of land, which is our raw material for future growth. Still on this page, on the bottom line, you can see the net debt over shareholders' equity, which reflects the net cash position that is still very healthy, and this is 11.4%. Lastly, now on the last slide, number 14, and continuing the quarterly early anticipation of dividends, we approved almost BRL 21 million related to the fourth quarter of 2023, and we are going to pay it still this month on March 27th, as you can see on the slide.
Here at the bottom, you see that since 2021, it's more than BRL 500 million or approximately BRL 2.55 per share in terms of cash or value generation that were paid out to our shareholders. Now, I end my presentation, and we can open for questions. Thank you very much.
We are now going to start our questions 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 name, your company, your question. If you want to ask questions through the microphone, click on the raise hand icon, also at the bottom menu of your Zoom screen. Please wait while we collect the questions. Our first question comes from Mr. Gustavo Cambauva from BTG. Please, Mr. Cambauva, you may ask your question.
Good morning, everyone. I have two questions to ask.
Could you talk about the pipeline of launches for 2024 and 2023? You had a slight drop in the volume of launches. What are the prospects for 2024? Could you talk about Minha Casa, Minha Vida, how much the brand Novvo, what is its share in the 2024 launches? How do you see the growth in the segment of low-income home? When we look at 2023, you can see that the gross debt grew quarter-on-quarter, and it's a level in Q4 which is very similar to the backlog margin. How do you see the new projects that are going to be launched in 2024 when you compare the current margin or the backlog margin? Are you going to expand margin or is it going to remain at 35%? Thank you.
Good morning, Cambauva. Thank you for the questions.
First, about pipeline. 2023, we launched less than we intended to. There are three projects that we held, two of them strategically. One is Roque Petroni, and we saw an opportunity of approving again the project with a new master plan. We think in terms of CDI, it was worthwhile holding it to launch it a year later to benefit from the new city's master plan. The second project that we held was Villa Prudente. That was launched yesterday officially. That was ready in the middle of December. We thought that it was a very short time for us to sell in December and then stop with the vacation, so we decided to hold it and launch it in the first quarter. The third was because the prosecutor's office, they were dividing the plot of land. It wasn't our land, but it involved us.
This has been solved, and we are launching it in 2024. In a nutshell, these three come to 2024. In 2024 in our pipeline, we have a little bit more than BRL 2 billion of PSV to launch in our share, and might get BRL 2 billion, BRL 3 billion if we think of the 100%. The second phase of Minha Casa, Minha Vida, but it's not really significant in terms of the whole. It's just BRL 120 million in the second phase of Barra Funda. There is a plot of land that we have just bought in February that we are going to prepare it, but it might be this year or most likely beginning of next year. Our growth for Minha Casa, Minha Vida, we say that at some point in time it may represent one third of our pipeline.
This is in the long term, and we are doing this still with great caution. Completing what Sandra said, Cambauva, we have purchased a very high-quality land bank. There is a plot of land in Paraíso next to the hospital, to the shopping mall, and this year in Paraíso is more than BRL 800 million this year. We have two in this region, but if it delays, it's because of approvals. We have another one in São Paulo, too, in Chácara Klabin, with a simpler approval, and in this manner, we hope to complete the pipeline, and we are checking this on a day to day so that we remain online.
Good morning, everyone. Thank you for the questions. This is Francisco speaking. Let me talk about margin. As you saw, the margin today is more than 35%, very reasonable result, and the margin of launches, the pipeline.
You see the pipeline of launches, and we do not see any margin expansion, but we think this is very reasonable. As the revenue grows strongly, if we see our business cycle, we might have a similar movement this year. So it might have good expansions and a profit. Thank you all very much.
Our next question comes from Mariangela Castro from Itaú BBA. Mariangela, you may ask your question. Your microphone is open.
Good morning. Thank you for taking my question. I have two questions. First, talking about the margin expansion. When we look at the unearned margin, which is 35%, how much of that is related to the high luxury launch? How much of it is related to Novvo? How can we see the dynamics of Minha Casa, Minha Vida in the company's overall performance in 2024? You had interesting expenses in this quarter.
When we think of sales expenses, what can we expect for 2024? You are going to have more sales stands, so can it affect the POC, and the unearned margin in some way?
Hi, Mariangela. Good morning. This is Francisco. Thank you for the question. First, margin. So Saffire versus Novvo margin, both of them have contributed positively to our bottom line as compared to the past projects. But Saffire, which is luxury, is much more significant for 2023, and also for the increase that we have in unearned margin than Novvo. It is only at the end of the year. It is similar. Saffire had started in the second quarter, and the Novvo margin is similar. So this is related to the launches that I mentioned, so it is slightly above. Moreover, there is the third mechanism, which is the accounting mechanism of POC.
As Saffire POC is much more significant than Novvo. POC Novvo is Minha Casa, Minha Vida, close to 20% POC. Then it evolved much more than Saffire than because of Novvo. It is above the average margin of the company. The second question related to sales expenses. In fact, this year we saw a growth. When we look at the annualized numbers, it is only 3%, very lean. But with fewer launches this year, this is a fact, so this made it easier. In the future, we have our launches, so this is going to be reflected, more sales, more launches, and we expect our sales expenses to go up in 2024. Thank you for the question.
Thank you, Francisco.
Mariangela, just complementing about commercial or sales expenses.
There are two launches for 2024 that we have already spent with sales stands because we were going to launch them last year. So there are two that are already booked in the numbers of 2023. Thank you, Sandra.
Our next question comes from Mr. Rafael Rehder from Safra. Your microphone is open, please.
Good morning. I also have two questions. The first one is just a feeling of how you see sales in the beginning of the year. We were talking to some other companies, and they said that in some regions they are slightly more competitive. How do you see inventory sales? Question number two, could you talk about your feasibility process? Are you looking to approve new projects? Do you work with a minimum margin that you try to have? How do you decide on that?
Thank you for the question.
As to sales, now at the beginning of the year, there is a launch that seems to be very strong. We had record visitations. We are really excited with the opening of our sales. Inventory is constant. It did not increase because the attention of realtors went to launches. Everyone is looking at the new project. It is beautiful. But last year we used to sell BRL 30 something million up to BRL 40 every month. And this month we only sold BRL 30 in January and February, except for Minha Casa, Minha Vida, which is about BRL 10. In terms of feasibility, our criteria is CDI. When we buy the land, we start counting time, and we need to make 17% of the net revenue over net revenue at present level. This is not accounting, this is managerial.
Accounting, this is Sandra's, but we work only with CDI, and managerial need to have a profit in CDI, or we just put the money in the CDI and go to sleep. This is Cyrela's criteria, and this criteria has proven to be very good along years. Because along years we accumulate a lot of property, much more than his CDI. We want to make more than financial investments. Otherwise, we just make an investment and do not need to work. Right?
Thank you very much. This is super clear. Thank you.
Our next question comes from Mr. Herman Lee from Bradesco BBI. Mr. Herman, your microphone is open.
Good morning. Thank you. Thank you for taking my question. I have a few questions. We had very good performance with a strong margin, and this is very much driven by equivalence.
What can we see in this line in terms of recurrence in the future? And what can we expect in terms of ROI in the future?
Good morning, Herman. This is Francisco. As to Eden, the main driver for our equivalence. In fact, this first year, 2023, this was very positive, and this reflects the first POC. It was a very, very large plot of land, more than 40 sqm , but the construction has not yet advanced. It is going very slowly. We have different lots. Lot A was launched a year ago, and there is another lot that is being launched. Both of them have the POC. Now for 2024, for example, we think that the product will still sell, but the accounting effect is slightly lower because the main POC came at the beginning. But this is three and a half years.
I do not know if I answered your question. Do you have any other questions?
I would like to understand about your ROE.
Herman, thank you for your question. Our ROE, since the third quarter of 2022, we are recovering it slowly and consistently. In 3Q, it was nine, 10%. It was to 11, 12, 13, and now it is at 19. It has been growing consistently. We have ROE above 20% in the past, and we think we are going back to those levels.
Thank you so much. Have a good day.
Our next question comes from Mr. Ruan Argenton from XP. Mr. Ruan, please, you may ask your question.
Thank you for the question, the presentation. Congratulations on your performance. I have two questions to ask. First of all, I would like to understand how you see the cash dynamics in the future.
You mentioned in your presentation that the land bank seems to be good for future launches. How do you see payment dynamics? I think that there were many payments taking place this year, and I think that cash generation was affected by that. How do you see it in the future? Question number two, it is just the details of this growth in revenue. You saw that there has been a significant evolution in the POC of Versace. How do you see this evolution in future quarters? Should we start having a stronger revenue booking, considering that backlog has been growing consistently? These are my questions. Thank you so much.
Hello, Ruan. Good morning. Thank you for your questions. About cash, we were expecting cash burn, and that will burn BRL 200 million, and down another BRL 200 million in 2024, and from 2025, we will be generating cash.
The BRL 200 million that we expect to burn this year, it is all for the payment of land. Then we have this quarter, as Ralph said, almost BRL 220 million that we have captured. You see our cash position seems to be robust. It is robust, but half of the cash is in SPEs, and I cannot always use that money. To reinforce our cash and because of this year's cash burn, we got this cash to be comfortable. For this year, when we are going to burn cash, despite this quarter, we think that we are going to get to 5%-10% of net debt, because today we are net cash, 10% max.
Thank you for the question, Ruan. Completing on accounting, in every quarter, consistently, there is a consistent growth in revenues because construction advances.
We advance quarter over quarter, and this reflects the stage at which our works are at different POCs. The advance at the construction has a higher and higher reflex in our numbers. For the fourth quarter, this is in a press release, just this revenue, even though we had not sold any new plot of land, any new buildings in Q4, even if we had not sold any new enterprises, we had BRL 140 million of everything that is being reported, BRL 140 million, more than 50% of the quarter's revenue in Q4 just came from the advance of constructions that were going on and were sold in the past. In terms of projections, very significantly looking to the future, we are going to analyze 140, 150.
If we look at Q4 and multiply by five, we get to an annual level of revenue that we could have in 2024, especially because of the advance of POC, because the cycle of our works will advance so that this share is going to be very significant. Of course, it is not going to be just 550 or 600. We are going to have all the revenues from our launches. This is a year that is making us very excited, both in operational aspects, but also in terms of accounting or financial aspect that is going to reflect everything that happens in operational front, especially construction works.
Thank you so much. Have a good day.
Our next question comes in writing from Saulo Santana, an individual investor. "Hello. Congratulations on the result. What about the company's buyback program? How is it going?"
Good morning, Saulo.
Thank you for your question. About the buyback, we had a program that opened 2022 to buy back seven million shares. We bought back 4.1 million. So it matured in December, and we renewed. So today we have no open or no ongoing buyback program in our company.
The questions and answer session has ended. We would like to turn it over to Mr. Ralph Horn for his closing remarks.
Thank you, everyone. We are very excited. We had a record in the beginning of year with visits, in two days, almost 550 customers. It shows that people like the product. We are always very excited and motivated for another great 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.