Good morning, and thank you for standing by. Welcome to Lavvi earnings release to announce the results of the third quarter of 2023. Today with us here, we have Mr. Ralph Horn, CEO, Ms. Sandra Attié, CFO, and Francisco de Paula , Investor Relations Manager. This event is being recorded, and all participants will be in listen-only mode during the company's presentation. After Lavvi's remarks, we are going to start the question-and-answer session when further instructions will be provided. Any participant with us during this conference call, please request the help of an operator by press star zero. This event is also being broadcast live via webcast over the Internet and may be accessed at Lavvi's website, ri.lavvi.com.br/en, where the presentation is also available. Participants may use slide menu whether they wish. A replay of this conference call will be available shortly after the event is concluded.
As a reminder, participants may ask questions via the webcast, that will be answered after the presentation of the company by the Investor Relations team. Before proceeding, let me mention that forward-looking statements made during this conference call relative to Lavvi's business perspectives, operation, and financial projections and goals are beliefs and assumptions of the company's management, and they are based on information currently available to the company. Forward-looking statements are not guarantee of performance because they involve risks and uncertainties and assumptions that refer to future events and therefore depend on circumstances that may or may not occur.
Investors and analysts should understand that conditions related to the macroeconomic scenario industry and other factors may affect the results of Lavvi and may lead to results that will be materially different from those expressed in such forward-looking statements. Now, I would like to turn the conference over to Mr. Ralph Horn, who's going to start the presentation. Mr. Horn, please.
Good morning. First of all, I would like to thank everyone for attending. It's an honor to have you with us on this conference call to talk about the results of the third quarter of Lavvi in 2023. We are very happy with the company's performance in the period. Even though we didn't have any launches, in the period we have inventory projects in Saffire. Our high-income project, Le Six Higienópolis, launched last quarter. That now exceeds 50% of sold PSV. I would also like to highlight our performance quarter after quarter. Our revenue has grown 60% year-on-year, and profit has grown even more, 75%, both quarter-on-quarter and year-to-date.
On the cash side, I highlight the robust net cash position with BRL 315 million and the payment of quarterly dividends recently approved by the board in the amount of BRL 11 million to be paid in November. In Q4, we are focused on a launch of Novvo Barra Funda, our first venture with the Novvo brand, 100% owned by Lavvi, through which we operate in the low-income segment, including Minha Casa, Minha Vida program. This project in the Barra Funda, 300 meters from the terminal, with more than 7,000 sq m and many attractions in a leisure area. We are very excited with everything that this new growth path can bring in terms of opportunities for the company.
Still in Q4, we also benefit from the new phase of Eden that is being launched by Cyrela right now with a PSV of BRL 300 million already in our participation. Finally, I would like to remind you that we have made a strategic decision to postpone the launch of Eden Sudeste at the beginning of next year. Thank you all very much. Now I turn it over to Sandra.
Good morning, everyone. As expected, we didn't have any launches in the third quarter. Our focus was to sell, and we had a good performance, both in Saffire launch in Q3, too, and inventory. year-to-date numbers, we have BRL 1 billion in sales, 37% above the nine months of last year. Our SoS is still high, above 50%. On slide number six, you can see our inventory. We closed the quarter of BRL 1.3 billion inventory in our share and almost 50% regarding launches of 2023 or 75% launched since 2022, meaning this is the short-term inventory.
The next delivery this year is above 90% sold. T oday we have only five units of ready to sell inventory. Now on slide seven, Q3, we have the land of Beneficência Portuguesa that we had bought in 2022, closing the land bank at BRL 4.2 billion of potential PSV in addition to 0.3, but still to be recorded. Overall, we have BRL 6.6 billion of four and a half in our share. For different reasons, we have changed our launch plan for this year, and in the fourth quarter, we are going to have part of Barra Funda and the second phase of Eden with Cyrela with bigger apartments.
On Barra Funda, on slide nine, you can see the details of its implementation. It's a 7,000 sq m plot land with full leisure area, with everything, a swimming pool, sports courts and everything. As usual, also as part of my highlight, we are going to cater to customers. Francisco is going to talk about the financial highlights.
Thank you, Sandra. Good morning, everyone. I'm going to start on slide number 10, where you're going to see the highlights of the period. At the top, you can see our operational performance already mentioned by Sandra. I'm going to start at the bottom. We closed the quarter with a good BRL 205 million net revenue, 59% year-on-year. Gross margin to 35%, 33.4% year-to-date, in line with last year. Net income reached almost BRL 500 million in this quarter. This is a quite strong level for a quarter without any launches. In this manner, the net margin is 34% in the quarter and 23% approximately for the nine months of the year, and the annualized ROE is 19%.
As we had said in previous quarters, we are still recovering as compared to last year, that it was at its worst, at 10%. Backlog revenue, BRL 1.3 billion year-on-year, with a readjustable margin very good, close to 35%. In terms of cash generation and burn. Now in the third quarter, cash burn was BRL 148 million. I would like to highlight the cash burn, especially meant for the purchase of land, because in June, we booked the land of Beneficência Portuguesa, and we have BRL 18 million. Despite the cash burn, the company's net cash position closed the first nine months is still very robust, in excess of BRL 300 million.
Now moving to slide number 12, I will talk about the main points that we have not mentioned yet. On the right-hand side, I am going to start with the financial result, net investment income. We exceeded BRL 16 million in terms of net investment income. It is a year-on-year 13% growth. Considering the last year, both the company's cash and Selic interest rates were at higher levels, thereby affecting the efficiency in cash management. Now, if we look at year-to-date numbers in terms of financial result, this reflects some one-off effects that we mentioned at the beginning of the year, such as, for example, the stress in the financial market of private credit. This factor has already been overcome. On the bottom of the slide, you have G&A growing at similar rates, both for the quarter-on-quarter and for the year-to-date numbers.
With the growth of revenue at levels that are well superior to that, about 60% per year. There is a dilution of G&A rate over the net income closing the year at 5%, which demonstrates how lean our company is. In terms of commercial expenses in this quarter, we have BRL 17 million, which represents about 8% of net revenue, both for the quarter and for the first nine months of the year. All of this on the last chart, net income has grown significantly 75% about, both in the quarter and for year-to-date numbers.
I n just nine months, the company has already profited 25% more than the whole year 2022. On slide 13 now, you can see the backlog revenue is at BRL 1.3 billion with a margin that is stable at 35%. Now on slide 14, the two columns that are highlighted here. On the last slide, you can see the net debt over shareholders' equity, which in our case is net cash over equity, is now at the level of 23.7%. Even if we reduce it compared to previous quarters when it was 36% to 48%, this number is still very healthy in terms of the net cash of the company.
Lastly, and now on the last slide number 15, and continuing the early payout of dividends. We had a board of directors meeting held on November 7th, in which we approved the payout of dividends amounting to BRL 11.5 million, scheduled to be paid still this month on November 27th. On the last bullet, you can see that nearly BRL 430 million, practically at BRL 2.15 per share, in terms of appreciation, considering everything that we did since 2021. We have now ended our presentation and we are open for question-and-answer.
Thank you. We are now going to start our Q&A session. If you have a question to ask, please press star one in your touch phone. If your question is answered, please press star two. Questions will be answered as we receive them. We kindly request you to pick up your headset and when asking the question in order to ensure optimal audio quality. Our first question comes from Gustavo Cambauva from BTG Pactual.
Hello, good morning, everyone. I have two questions. The first one, could you tell us a little bit about the Novvo Barra Funda project, Minha Casa, Minha Vida. It is going to be launched Q4. Do you see anything going on at sales book? How are you feeling about the demand and interest? Can you talk about the challenge of launching a new brand? It's the first project. How is it going? What about acceptance both from brokers and the sales audience? Can you tell us a little bit about the launch of the Novvo brand?
Question number two is more a general question. Can you tell us a little how you see the current environment for middle and high income? The macroeconomic scenario does not yet seem to be very good, but sales are performing well both in terms of inventory. How do you see the market and the prospects for the launches next year? Things that you imagine in terms of, do you see a growth in launches as compared to 2023? Thank you.
Good morning, Cambauva. How are you? This is Ralph. Our first launch of Minha Casa, Minha Vida, the plot of land has a great location. It's just 300 meters from the bus and train terminal of Barra Funda. We have sold almost 100 units there. We are having a little bit of difficulty in the first sale because it's a system that is slightly different from ours, both for credit and those that draft the documents. Because the launch at the beginning of the company, you can have an entirely new company. We combine some of our old employees, but we are happy things are happening and we are excited. It all depends on a good purchase of the plot of land. The customers, they don't have much land. They can choose, they know what they want, and we are excited, but we are going to have the usual difficulties.
We need to choose well the land to make good purchases, and we want to grow slowly but consistently in this segment with a percentage of 30%. We are passionate by the mid-high. This is our favorite segment. We want to focus also on Minha Casa, Minha Vida because it's good. It can provide good results and good performance. We are looking into other businesses, but we are always very careful about the year. I think that on the whole this has been a very good year in terms of sale, despite all the turbulences and everything in the financial market, but in sales it's been a good year.
We talked to Cyrela a lot. They are doing very well in terms of sales. Our inventory, we have the advantage of having very good products. We have liquidity. We want to have liquidity, and we are excited too, and we think that next year is going to be like this year with nothing much new. We have good launches for next year. We have already postponed Vila Prudente, but we are excited with next year. We think that we will continue to sell well.
Thank you very much. Have a good day.
Our next question comes from Ruan Argenton from XP Investments.
Hello, thank you for taking my question. I would like to touch on two things. Number one, this is about the evolution of revenues. We are seeing a positive performance in liquidity. How do you see the evolution of your investments from now on? We've been seeing the backlog growing considerably, but could you tell us in terms of construction works, the levels of revenue in what you have seen so far and what we are seeing in the future, especially in terms of volatility inventory assets, despite what you have done, something that is more strategic. What is the expectation for sales in Q4?
Hello, Ruan. Good morning, thank you for your question. This is Francisco answering your question. First I will talk about the evolution of revenue. On average, our constructions go earlier at a more advanced stage. We have this backlog, have revenue. On average, we didn't have so much revenue evolution in terms of backlog. We formed more backlog because of new sales, but not necessarily turning it into results because of slower construction. It's not a delay, but it's just the pace.
Right now, Villa Versace is at a more advanced stage of its construction as other construction sites. Our construction cycle is right now at the stage where there are more expenses. Then we book that as cost, and then we book that in the backlog revenue. This has a greater contribution than one year ago. These levels are likely to remain for a while. What is going on now is happening again as other projects get into their final phases of construction. We'll be able to launch a lot, and I hope that sales continue to grow. Now, Ralph is going to complement the answer talking about inventory.
Hello. Last year we created an inventory department. The fact that we don't have too many launches and we have a lot of PSV, we have adjusted our prices as compared to the competition. There are some stores where the construction takes up the entire plot of land, and then we can't have realtors there. Real estate agents like to be there, sitting there with a computer and making offers.
Also internally, we've been doing many awards for inventory. We award the real estate agent that sells more. As real estate agents look more at the sale of inventory than the sale of launches, the lack of launches has made people just focus much more on inventory. It's a little bit of everything. We have an annual target and a bonus for the sales department in terms of sales over the inventory. I think that they're going to reach that target. It's almost fully done. Inventory department is separate from launches department.
Thank you very much. Thank you for your answer.
Our next question comes from Rafael Rehder from Banco Safra.
Thank you for taking my question. I have two questions to ask. First of all, I'd like to talk about Novvo. You have a new structure that you are contracting, focusing on the low-income market. But, numbers do not seem to be very high to me. Have you already contracted or hired everyone that you need to keep the operation going? Or is this going to grow a little bit more in future quarters? Number two, I have a question to ask about materials. Some companies are talking about how difficult it is to rent construction materials.
Hi, Rafael. Good morning. Thank you for your question about G&A. Was part of Novvo's team. We had to hire them one year ago. We hire them as the scheme evolved in here. We have something for transfers, for credit, something more technical in this area. Now, there are few people to be added. quarter-on-quarter, there is just one quarter of some hiring. To structure the company, it may be as high as 5% or 10% of the current G&A, considering Novvo and other structures.
About materials and equipment rental, this is an issue. It is something that we are monitoring closely. For example, the rental of rack systems, especially with new entrants. This is going to run with new pieces of equipment. As we have new projects, we can plan in advance. We are closing the rental, something that we need for February, March 2024. It is a matter of planning. We try and agree and talk to our suppliers so that we do not have any problems with these types of equipment.
Thank you so much.
Our next question comes from Mariangela Castro from Itaú.
Thank you for the call, I have two questions. I would like to hear more about the cash dynamics. Last quarter, you said a BRL 50 million cash between 2023 and 2024. Are you keeping that level after the cash burn this quarter? Another question about Novvo in Barra Funda. How do you see margins affecting the company's margins? Are they close to other projects that has helped in the current Margin, or will there be a different margin or different dynamics?
I apologize, I think that we crashed here. Well, about Novvo margin. We bought a very good block of land at very good conditions. We started at 35%. This is not going to adversely affect our margins in this segment. This segment is not going to affect mid and high income. About cash generation. We did not have any surprises in the operation, but we reviewed the land to buy b ecause of negotiations that went on. We are expecting a cash burn by the end of 2024, amounting to about BRL 300 million. More than 2/3 of this amount refers to the payment of land. As a reminder, after 2025, we will be generating cash again to recover this cash burn, so we are not worried about the cash burn this year.
Thank you, Sandra. BRL 300 million from now on?
Right, by December 2024.
Thank you so much.
Our next question on the webcast comes from Bradesco.
Good morning. Could you give us more color on Novvo? Are you still going to do the launch in Barra Funda, and what is the pipeline now that the BRL 2.2 billion plot of land is no longer going to be part of this program?
Well, the plot of land of Hípica is no longer going to the program because we think that mid and high there will provide better results. We have ongoing negotiations for new plots of land. We have signed a few things, and we are going to grow consistently and slowly, as Francisco said. We want to make the most of our opportunities to take advantage of the current market conditions and to go slowly. We have about three or four plots of land in due diligence to find whether we are going to move forward or not. We are going to define the PSV for next year.
Ladies and gentlemen, we now end the question-and-answer section. I would like to return the floor to Mr. Ralph Horn for his closing remarks. Mr. Horn, please.
We are very happy with this year. We are very optimistic. We want to grow more and more, always safely with a lean team, very integrated with the team and very excited. Thank you all very much, and I wish success to everyone.
Lavvi's conference call has now ended. We thank you very much for attending, and we wish you a very good day.