Good morning, everyone. Welcome to Lavvi's Earnings Call to announce the results of the third quarter of 2026 for Lavvi. The presentation and comments on the results will be presented by Ralph Horn, the CEO, and Sandra, CFO, and Naira Pesce Dias, IR manager. The simultaneous translation tool is available on the platform. To access, just click on the interpretation button at the bottom of your screen and choose your preferred language. This conference call is being recorded and will be available on the company's investor relations website at www.ri.lavvi.com.br, as well as the slide deck used here. Please be advised that all participants will be in listen-only mode during the company's presentation. Then we are going to start a questions and answer session when further instructions will be provided.
Before proceeding, we take this opportunity to emphasize that forward-looking statements are based on the recent assumptions of Lavvi's management and are based on information currently available to Lavvi. The forward-looking statements may involve risks and uncertainties that they relate to future events and therefore depend on circumstances that may or may not occur. Investors, analysts and journalists should take into account that events related to the macroeconomic scenario, industry, and other factors could lead the results to be materially different from those expressed in such forward-looking statements. We are now going to start the presentation, giving the floor to Mr. Ralph Horn. Mr. Horn, please.
Good morning, everyone. I would like to thank you all for your presence. It is always an honor to have you with us in this conference call to announce the results of Lavvi for the third quarter of 2026.
The economic and political scenario are more challenging, higher interest rates, customers are more cautious, especially investors. We feel this movement, and we are not immune. Therefore, this is a time for caution, and this is how we are managing the company. At the same time, we have a lot of trust and confidence in our projects, and we believe we will be slightly less impacted than the market. We have projects at unique locations, differentiated products, and a very well-sold portfolio at Novvo, which gives us diversification in the low-income segment. In the quarter, we launched Well Perdizes by Novvo and apartments in partnership with Cyrela. Net sales were BRL 420 million, with a highlight being the sale of ready-made units. Our completed inventory fell 22%, even with the delivery of Galleria Klabin, and the first phase and Eden both sold out.
In the financial sector, revenue was BRL 532 million, an increase of 28% compared to last year. In future quarters, we are going to maintain discipline, calibrate the pace of launches, prioritize sale inventory, preserve cash, and be selective in capital allocation. Our landbank allows us to choose the right time for each launch. We would like to thank all shareholders and partners. I will give the floor to Sandra to talk about the operational results.
Thank you, Ralph. Good morning, everyone. On slide five, you can see Well Perdizes, our Novvo launch in the quarter. This is a very well-located project in the district of Perdizes, close to the new subway station, and to a park, and to a cultural complex.
We have studios or two-bedroom apartments ranging from 25 to 51 sq m, with a potential PSV of BRL 118 million and complete leisure facilities, swimming pool, beach tennis court, co-working, and shared laundry. In 40 days, we have sold 14% of our PSV. On slide six, we launched Zen Apartments, the studio tower in partnership with Cyrela. It is right across from Ibirapuera Park, 1 km from the largest park in São Paulo, one of the best-valued regions in São Paulo. There are 227 studios and one-bedroom units ranging from 30 to 36 with a PSV of BRL 115 million. We closed September with 28% sold. On slide seven, you can see the launches, sales, and cancellations of the quarter, in addition to the comparison of the nine months. We launched BRL 538 million in the quarter, 27% above the third quarter of 2025.
In year-to-date numbers, launches were stable as compared to the first nine months of 2025, with the Minha Casa, Minha Vida segment accounting for 28% of total launch of 37% in the largest percentage. On the side of sales, we closed the quarter BRL 420 million in 100% vision, 20% below third quarter 2025. Year-to-date numbers, however, the drop is of only 4% compared to 2025. Cancellations were a positive surprise. Considering Lavvi and Novvo projects without partners, the canceled PSV dropped 26% as compared to the third quarter of 2025 and 59% compared to the second quarter of 2026. With the exception of two investors that canceled several studio units, all other cases were covered and do not represent any risk. We are back to 12 cancellations per month in Lavvi and 11 at Novvo.
On slide eight, our PSV for the last 12 months is at a level that we still consider healthy. Lavvi PSV is up by 2 percentage points from 45% to 47%, driven by the sales of Jardim da Hípica. At Novvo, the indicator dropped from 79% to 51%, impacted by the macroeconomic scenario that is more challenging and by the concentration offer in Well Perdizes projects with more than 1,200 units launched this quarter. On slide nine, our inventory went up 5% in the quarter, closing at BRL 3.2 billion or BRL 2.5 billion in percentage of Lavvi. Novvo accounts for 16% of the total inventory, and three-quarters of that volume correspond to projects launched this year with Novvo Santa Marina and Valparaiso. On the chart at the left, you can see that projects scheduled to be delivered by 2028 already have 80% or more of their units sold.
On the right-hand side, despite the delivery of two enterprises in the quarter, our ready inventory dropped to 4.5% of total or 127 units. We remain focused on selling this inventory. On slide 10, you can see the details of inventory per project. Excluding, we have an awaited average that is very good, that is 81.6% of sold units. Going to slides 11 and 12, Eden Park by Dror, under the management of Cyrela, and Galleria Klabin together add up BRL 1.9 billion in PSV, launched in 2022, and both were delivered very well sold with 99% and 98% respectively. Galleria , that is self-managed, went the quarter with 59% of the units settled between settlements and transfers. Today, one month after delivery, we already have 63% of the project settled.
The project has an LTV of 17%, which makes it easier to transfer at a time of high interest rates. Galleria Klabin has one studio building, 100% sold to a fund, and a residential tower with apartments 166 and 234 sq m. In addition, with a differentiated concept of penthouses of 454, when customers park their cars just at their door. For Eden Park, we have the East and West Towers, the first phase on the most iconic complexes in the district of Brooklin in São Paulo, developed in partnership with Cyrela, close to Morumbi Shopping Mall. The project designed by the Israeli designer and architect Dror Benshetrit, and was designed as a concept innovation inspired by nature, with green areas integrated to leisure, a green lung inside the city of São Paulo. We have more than 1,000 apartments of 94 and 134 sq m with PSV 1.3 million.
Delivered with 98% sold, and we only have 13 units. Next phases as Casa Éden and Escape Éden are still at work. Lastly, on slide 13, you can see our landbank. We continue with 9.1% of potential PSV or 6.6 in the company's percentage, of which 18% corresponds to the brand Novvo. This landbank is enough to supply our launches by 2028 and part of 2029, which provides us flexibility to choose the best timing for each project. Now I would like to give the floor to Naira, who is going to talk about the financial results.
Thank you, Sandra. Good morning, everyone. Now moving to slide 16, on the first chart, you can see net revenue of BRL 332 million in the quarter, growth of 28% in a yearly comparison and 7% quarterly comparison.
Revenue in the quarter had a greater share of the evolution of construction work, with a highlight of Galleria Klabin, which reached 100% complete, in addition to Alive and Soleil. Year-to-date numbers, net revenue reached BRL 1.4 billion, 14% above the same period in 2025. In the second chart, adjusted gross profit totaled BRL 203 million, a 30% growth year-on-year and 9% quarter-on-quarter, with a margin of 38.2%. This performance was driven especially by Villa Versace, Galleria Klabin, and Eden. For Jardim da Hípica, as construction is still in the initial phase and the land was bought at very good conditions, the percentage of financial evolution is still low, and sales will be booked in the results gradually as construction evolves.
On the right-hand side, financial result was positive by 700,000, and the quarterly comparison is better, as considering that in the second quarter of 2026, it had been impacted by the review of the method of booking the cost for the issuance of debt. In yearly comparison, the reduction reflected especially the interest rates of the third emission of CRI in 4Q25. In the lower part of the slide, the general expenses and administrative expenses totaled BRL 26 million, a reduction of 3% compared to the previous quarter and were at 4.9% and less than the level of the third quarter of 2025. The increase in annual comparison is related especially with expansion in headcount to bear the growth of the company. Commercial expenses totaled BRL 40 million, a reduction of 19% as compared to the second quarter of 2026.
Despite the launch of Well Perdizes, they represent 7.5% in the net revenue. In year-to-date numbers, the increase of 40% reflects especially the launches in the period, especially Jardim da Hípica, in addition to expenses YTBI and the booking of Novvo units in the Minha Casa, Minha Vida program.
Lastly, net income was BRL 91 million, a 10% growth compared to the previous quarter and a reduction of 13% in the annual comparison, with a net margin of 17%. The main effect of the quarter comes from equity income, adding, had a provision of approximately BRL 22 million participation of Lavvi, referring to expected payment of performance fee. This effect impacted the net margin by about 4 percentage points. Excluding the equity income in the third quarter and the second quarter, the net income would have had a growth of 59% in the quarter, which shows the operational evolution of the company.
Going to slide 17, accumulated in the year, Lavvi reached BRL 1.4 billion net revenue, BRL 243 million in net revenue, and all who gains a net higher and higher share, accounting for about 15% of revenues in conference with 5% in 2024. On slide 18, you can see the annualized ROE of 23%. Our return is consistently above 20%, which reflects the company's capacity to create value. On slide 19, you can see the backlog. The revenue of sales to be booked ended the quarter with BRL 2.9 million, a growth of 23% in yearly comparison, reduction of 4% over the previous quarter because of the higher volume of revenue booked in the period and delivery of Galleria and evolution of the works of Palace here.
The growth margin reached 39.1%, up 2.1 percentage points as compared to Q3 2025, which represents approximately BRL 1.1 billion of gross profit to be booked in the next few years, according to the evolution of the works. The company had an adjusted cash generation of BRL 14 million in the quarter, discounting BRL 17 million in dividends paid out in August and BRL 2.4 million meant for the buyback of shares. In ex-land vision, generation was BRL 91 million, 27% above the previous quarter, reflecting the good capacity to convert cash of our projects in construction. In year-to-date numbers, the cash consumption adjusted was BRL 57 million, or generation BRL 192 million in the ex-land vision. We ended September with a net debt of BRL 583 million and leverage of 32.3%.
Last, on slide 21, on the 13th of November, we are going to pay the fourth and last installment of dividends approved by the board, a total of BRL 70 million, completing the BRL 200 million approved in January. In addition, in the buyback program approved in August, we acquired 250,000 shares, totaling BRL 2.4 million. Thank you very much for your participation. Now we are 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 question. You want to ask your question on the microphone, please click on the raise hand icon at the bottom of your screen. Please wait while we collect the questions. Our first question comes from Ms. Juliana David from Itaú BBA. Please, Juliana.
Good morning, everyone. Thank you for taking my question. I have two. First is about the gross margin. You saw the margin in the quarter going to above 35%, and we have been seeing subsequent increases in margin in this quarter. My question about margin is first, which is the segment that is contributing the most? Is it the low income or mid and high income? When do you think the margin is going to stabilize? Second question is about your launch pipeline for next year. The macroeconomic scenario is more challenging. Does it impact your expectation of launches in both in low income and mid and high income?
Hi, Juliana. Thank you very much for your question. First, I'll talk about margin, and then Ralph is going to complement. Well, gross margin, yes, is going back. Our IS is about 39.
If we break it down annually, it's 37% this year, next year 38%, so it is likely to go up. Minha Casa, Minha Vida has a positive contribution to the margin, but our new land also has very good margin. That's why you can see it's 38%, 39% from now on. We do expect to see an increase in margin.
Hi, Juliana. Well, about next year's pipeline. This year, so far, we have canceled our last launch in Moema. It's large because of the current scenario, and we are likely to get to next year with lots approved to launch with a major pipeline. But we need to see whether we can launch or not. The time now is of indecision, fear. People are kind of afraid. People are still angry. We can feel that in the market, in managers, brokers, and customers.
But we think that things tend to get calmer because people are going to accept reality in the future. Our fear today is not to spend cash. We want to keep cash at the current situation, because if we sell and if we launch and sell, we are going to consume cash, and that's not good. On the pipeline, we have bought a lot that we can give up. In our minds, if there's too much stress, then we think there might not have we might giving up some lands of Minha Casa, Minha Vida, the low income, and we're going to focus more on high luxury, and because rich people will always be rich, and only if there's a major crisis. This is the macro vision is this. This is our mindset. But it's not absolute truth. It can change. Thank you very much.
Our next question comes from Herman Lee from Bradesco BBI. Mr. Herman, Mr. Lee, please.
Thank you very much for taking my question. I have two questions actually. First, we saw major banks increasing their interest rates. How do you see the pace of transfers and the expectation that you have of delinquency rates? While you said that you want to be more conservative and not burn cash, what do you think about dividends for 2027?
Hello, Herman. Good morning. Thank you for your question. About transfers, as we usually say, we have a super healthy portfolio with 34% LTVs. When at the time of delivery, they're not going to cancel without reason, and with just a 33% LTV, it's easy to transfer. They can still transfer despite high interest rates. We have no problems with transfers.
We are not having customers that we lose at the time of transfers, and as I said, the cancellations, we lose them as per their life in the project, not related to delivery. We are okay in terms of transfers, and despite such high interest rates. About dividends, as Ralph said, our dividend mindset is always to pay obviously at least 25% and then analyze our cash flow. If there is any surplus, pay out more. Right now, we want to preserve cash, and we are going to feel what the market is like to see if there is any space for us to pay dividends or to buy back shares. We remain with a minimum of 25%.
This year, we are paying the dividends that we approved in January, tax-free, the BRL 200 million, and this is the last installment that we are going to pay in November.
Very clear, Sandra. Thank you very much.
Our next question comes from João Pedro Rodrigues from XP.
Good morning. Thank you for the opportunity. Thank you for taking my questions. I have two questions. First, I would like to ask you, I think that in the second quarter, the gross margin of a low-income segment could have been bigger, except for a Novvo Barra Funda project that drove down the margin. Could you explain and give us more details about what happened in the project? Did you sell it to any bigger customers? Did you need to give a discount to sell more? What about margins in the future? This is the first question.
The second question is about speed of sales. It has slowed down a little bit. It comes from a slightly more challenging scenario, and it is challenging for everyone. How do you see October and the fourth quarter? Do you imagine the scenario remains difficult and maybe SoS will be closer to the second quarter, or do you see any marginal improvement in the first month of the fourth quarter?
João, hello, how are you? Well, Barra Funda, we had an initial margin that was very good, well above. Our margin was 18, and this was our first Minha Casa, Minha Vida project, the first low income. We did not want to do the construction, and no one wanted to take it over. We had to learn
As we learned, the first project was late, which was a lesson learned for the next ones. Land shortage of labor and lack of experience in the sector delayed the construction, and I think that we will deliver 100% of it. We are paying a fine, and that is why the result is worse. We learned how to work, and this is good. Whenever there is new business, we learn. For other constructions, they are more advanced. There was something with piping and the right timing. Everything that we learned, we are applying to the rest of the company. About speed of sales. Yes, we feel a reduction in the speed now. In the properties that we have, we have promotions, because we do not think it is going to go down in the short term, because it is worth 100 and you sell by 90.
In one year, it's another 15%, and in one year, it's not going to be worth 15% more because there is tax to pay, management fees. We are turning our inventory into cash. With these promotions, we are likely to soften the impact. We have tax policies and people are calmer, everything is back to normal. It might be different. In the short term, we don't want our brokers to be discouraged and not to work, because many people think that the scare is going to go over and things are going to go back to what used to be before or not. There will be a launch in the fourth quarter of Emiliano, our high-income project. There's excellent expectation. It's for wealthier people with more money. We have very good expectation for this project.
Thank you very much for your explanations. Have a good day.
Thank you. As a reminder, if you want to ask a question, please click on the Q&A icon at the bottom of the screen and type your question. If you want to ask your questions on the microphone, just click on the raise hand button and ask your question. Once again, 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 your question over the microphone, just click on the raise hand icon at the bottom of your Zoom screen. Our questions and answers discussion has now ended. I would like to turn the conference over to Mr. Horn for his closing remarks.
Well, thank you all very much for being with us. We are going through a crisis.
This is not the first one, it's not going to be the last one. We are analyzing what to do every single day, always favoring cash to get over the more difficult phase, and we think everything is going to be fine. Thank you all very much. Goodbye.
This conference call has now ended. Thank you very much for your attendance, and have a good day.