Good morning, and thank you for holding. Welcome to Melnick's Earnings Call concerning the results of the first quarter of 2026. I would like to point out that for those who need simultaneous translation, the tool is available on the platform. To use it, you have to click on the button Interpretation, the globe icon at the bottom of the screen, and choose your preferred language, Portuguese or English. For those who will listen to this teleconference in English, there is an option available to mute the original audio in Portuguese by clicking on the Mute Original Audio button. We would like to inform you that this event is being and will be made available on the company's website, ri.melnick.com.br, where the complete material concerning this earnings call will be available. It is also possible to download this presentation by way of the chat icon in both Portuguese and English.
During the company's presentation, all participants will have their microphones on mute. Following that, we will begin the Q&A session. To ask questions, click on the Raise Hand or Q&A icons at the bottom of your screen and type in your question to join the line. When you are called, a request to activate your microphone will show on the screen, and then you must activate it to ask your question. We would like to clarify that any statements that might be made during this teleconference regarding Melnick's business prospects, as well as its operating and financial projections and goals, are based on the beliefs and assumptions held by the company's management and information currently available. Forward-looking considerations are not a guarantee of performance and involve risks, uncertainties, and assumptions since they refer to future events and therefore depend on circumstances that may or may not happen.
Investors should understand that general economic conditions, industry conditions, and other operating factors may affect Melnick's future outcomes and may lead to results that materially differ from those expressed in these future considerations. Here with us today are the Chief Executives of the company, Mr. Leandro Melnick, Chief Executive Officer, Mr. Juliano Melnick, Chief Financial Officer and Investor Relations Director, and Mr. Joelson Boeira, Administrative and Investor Relations Director. I will now give the floor to Mr. Juliano Melnick.
Good morning. I would like to thank you all for attending Melnick's earnings call for the first quarter of 2026. Let us begin by going over the highlights for the quarter on slide three of this presentation. In the box on the left-hand side of this slide, we show you the BRL 213 million in net launches in the quarter.
In the next box, we highlight the BRL 300 million in net sales in the quarter, as well as the reduction of 14% in the finished inventory when compared with the previous quarter. In the box on the right-hand side of this slide, we highlight the gross margin ex-financing of 25.5% in the quarter and the net income of BRL 25 million, which is an increase of 86% when compared with the first quarter of 2025. Moving on to slide four, we can see the BRL 249 million in gross VGV launched in the quarter and BRL 213 million net, two launches in Porto Alegre, Seen Três Figueiras and phase two of Open Bosque in the Minha Casa, Minha Vida segment. In slide five, we present Seen Três Figueiras , an upper-middle-income project that has 57 units with three en suites and complete infrastructure, which is currently 56% sold.
Also, Open Bosque phase two, a project in Minha Casa, Minha Vida segment, where 51% of the units have already been sold. Let us now move on to slide six, where we discuss the company's net sales. In the graph on the left-hand side, we can see that SOS of launches in the quarter was 38%, whereas the SOS of inventory was 15%, which means an average SOS of 18% in the quarter. We had BRL 300 million in net sales, of which BRL 218 million was inventory sales and BRL 82 million was sales of launches. In the pie chart on the upper right-hand corner of this slide, we break down sales by business unit, where 85% of sales were concentrated in the Incorporadora unit.
Finally, in the bar chart on the bottom right-hand corner of this slide, when we look at the projects to be delivered this year, 86% of their units have already been sold, which gives us the whole year to sell the remaining 14%. In the next slide, number seven, in the graph on the left-hand side, we can see the company's deliveries. In the first quarter of this year, it amounted to only BRL 23 million of PSV. On the right-hand side of this slide, we bring some information concerning our operating capacity. Currently, we have 20 active construction sites, of which 14 are in Incorporadora, four in Urbanizadora, and two in Open, amounting to over 4,500 units under construction. In the eighth slide, we show you the only delivery of the quarter, which is 84% sold on average.
It is the third phase of The Garden, a high-end residential development in the city of Canoas. In slide nine, we break down the company's inventory by year of conclusion. To facilitate the understanding of the company's finished inventory, the box on the left-hand side of the slide applies. Highlighting the doughnut graph, the inventory of launches prior to 2020, the IPO, pre-IPO, it consists mostly of commercial properties amounting 88% of inventory, and it's worth BRL 118 million. The bar graph in the same block shows that currently we have BRL 1.258 billion in inventory, excluding the inventory launched prior to 2020. Out of the total inventory, only 5% or BRL 76 million corresponds to finished inventory after 2020. Out of the remaining inventory, BRL 115 million will be finished by the end of 2026. The graph in the upper right-hand corner breaks down the composition of our finished inventory worth BRL 194 million.
Only BRL 22 million of it is at Urbanizadora, BRL 64 million is residential, of which BRL 4 million is leased. The oldest least liquid inventory, the commercial units, which include office space, stores, and hotels, add up to BRL 108 million, and BRL 39 million of which is leased or referred to hotel units. Here I want to draw your attention to the 14% of reduction in the finished inventory in the quarter. At the bottom of this slide, we show the reduction of finished inventory in these past years, which at one point was 31% of total inventory, now represents 14%, mainly as a result of our reversible lease strategy. In the next slide, number 10, we discuss our land bank.
In the box on the left-hand side of the slide, you can see that currently we have BRL 4.4 billion in total PSV, of which BRL 3.2 billion is Melnick share, comprising 26 lot surfaces. Roughly 20% of it has already been approved. In the next box, we show the composition of our land bank, where 62% is with Incorporadora. Moving on to slide 11, where we show the company's financial indicators, we observe that in the graph on the upper left-hand corner, the net revenue in the quarter was BRL 320 million. The graph on the right-hand side shows that the gross profit in the quarter was BRL 78 million and the gross margin excluding finance and production of 28.5%. At the bottom of the slide, we show our net income of BRL 25 million in the quarter and net margin before minority interest of 11.2%.
In slide 12, our capital structure is shown in the chart on the left-hand side. We ended the quarter with a net debt of BRL 452 million, a gross debt of BRL 702 million, mainly to finance our projects under construction, and total cash position of BRL 250 million. At present, our shareholders' equity is approximately BRL 1.237 billion, and our capital structure represents a net debt to equity ratio of 36.6%. The box at the bottom highlights the consolidated cash position of BRL 250 million and the profile of our debt, which consists approximately of 78% of financing production. In the quarter, the company burned operating cash to the amount of BRL 33.8 million, of which approximately BRL 22 million was used to purchase land. Besides, we carried out a stock buyback to the amount of BRL 10.5 million. Thank you all for your attention. I would like now to give the floor to Leandro Melnick, the company Chief Executive Officer, for his final remarks, and then we will take your questions.
Good morning. We ended the first quarter of 2026 with good operating numbers. Considering the country's current macroeconomic scenario, our figures, when compared with the same period of the previous year, represent a significant improvement. The company's results increased 86% when compared with the first quarter of 2025, reaching BRL 25 million. Our sales reached BRL 300 million in this quarter, surpassing by much the results in the same quarter of the previous year, which was BRL 130 million. Additionally, we had some launches in this first quarter, which didn't happen in the same period of last year. We'll have a year with many deliveries of projects that have been selling very well. Projects that demonstrate that Porto Alegre's market has been absorbing our products.
The products that Melnick has been developing, building, and delivering have consistent differentiated factors in relation to what the market has been able to deliver, for the most part. This leads us to the understanding that we are going to have a very positive year. A year of evolution compared with the results we had in the previous year, and this is part of the company's strategic plan.
We will now begin our Q&A session. Remember that to ask questions, you must click on the raise hand or Q&A icons at the bottom of your screen and type in your question to join the line. When you are called, a request to activate your microphone will show on the screen, and then you must activate it to ask your question. Beginning now, our question comes from Gustavo Fabris from BTG Pactual. You may proceed.
Hello, good morning. I have two questions here. The first, I even see some news about this, about the new zoning for Porto Alegre. I would like to have an update regarding what you see this will have for Melnick, what it means for you in terms of purchasing land, the kinds of products, even launches in the year. What this new master plan can change for the company. The second question is the sales of inventory. You commented that you sold a lot of inventory. I would like to understand how you see this demand at the end, what kind of strategies you have been using to sell these units. If you have to give some discounts. This is what I'd like to know.
Good morning. I will answer your first question. Concerning the master plan for Porto Alegre, it was consolidated yesterday. The council of the city. It's a relevant master plan with many significant changes where the more strategic vision for the city, it increases the density for the city, releasing some parts, changing the way that the buildings will be laid out. It will increase the density, the population density of the city, leading to a more appropriate use of the space, and this evolution will have an impact in the mid-term to our operation. Probably, we're going to have bigger builds, taller buildings in land that today we have in the same land as smaller builds. Our land bank is significant, the part that we have purchased and the part we have swapped. In the mid and long term, we see a potential to improve the projects in this land.
If you have been following the crisis, the real estate crisis the city has been going through, a decrease in the price of land, which is different from what's happening in other cities. Our real estate market has been suffering the result of the high interest rates. This has been affecting price. It changes the conditions for purchasing this land. Adding these two factors, land bank in the mid and long term, we see an interesting view. We are going through a moment that is increasing the attractiveness of this land. Now with this new master plan, we're going to see land that can deliver a higher potential. We have been analyzing this case by case in terms of the land bank we have and the pipeline we have, but our evaluation is a very positive one for coming years.
Juliano here. Thank you for your question. I'm going to answer your second question regarding inventory, finished inventory. In this first quarter of the year was a very good quarter for sales of inventory. We had a Melnick Day, an event that happened in the first quarter this year. Last year, it happened in the second quarter. We were able to speed up the sale of inventory. Last year it represented more than 30% of the sales of the company. Today, it's below 15%. We have been reducing the size of this inventory, especially because it's an older inventory, which is basically commercial inventory that was created when there was more demand for this kind of product. We have been using our reversible leasing strategy, where we lease these units, commercial units, and then sell them in time. Now we see the results.
The finished inventory reduced from 80% to 14% now. In terms of margin, we are always updating our values using the real values. We are always close to the reality. It is natural that this finished inventory had some slightly lower margins. Because it brings the margins a little lower. But it has been moving along very well in terms of moving this inventory. For the next quarters, we believe we will be able to sell this inventory well. In the future, we will get to the position that we have always imagined. To a position that will be between 10% and 15%, close to 10%, but we still have a few months to keep doing this.
When we separate this older commercial inventory from the project that we have delivered more recently that are 80%, 90% sold, this finished inventory in these past few years, we have always been lower than 10%, 6%, 7%. It is a very healthy inventory that has been coming, the newer one.
Thank you.
Our next question comes from Juliana Veiga from Itaú BBA. You may now ask your question.
Good morning. I have two questions here. The first one is concerning the margins. When we look at the accounting margin, we see an increase in the accounting margin in relation to the backlog margin which dropped a little bit in this first quarter. I would like you to explain the motivation for this dynamic, and also if we had seen a one-off effect in these margins. And how you see these margins going forward. The second question is regarding cash generation. I would like to understand a little bit more about how you are generating cash this year, and how this affects the dividend payout.
Hello, Juliana. Thank you for your question. Regarding margins, we have been analyzing previous quarters. We have seen an increase in these margins. When you look at the quarter readings, we have to take into consideration the seasonality. We also have the Melnick Day, which is a very important factor because it increases the volume of sales in the quarter. In previous years, we also saw this phenomenon. The quarter in which the Melnick Day event happens, we have some noise. Let us put it that way. That increases the margins. The company's margin is stable.
Looking forward, we see an increase because we have been able to transfer parts of these costs to the price, and it has been absorbed very well. We have been 90% - 95% sold. But the composition, the recovery of this price is slow, has been recovering the margins. But in this quarter, we have had this Melnick Day noise because it concentrates a lot of sales of inventory. This year, the event, when it comes to inventory, because it refers to projects that will be delivered and the finished inventory is selling very well. We are going to concentrate the event on these more best-selling projects, so the margin becomes a little more negative. But the reading that we make is there is stability in these margins, the accounting margin, the REF backlog margin. Concerning cash, our cash position.
We have a dividend payout policy that is very clear. We are a company that focuses on cash generation and dividend payout. Of course, the real estate market, which adds to the macroeconomics of Brazil. We manage the year and the moment according to circumstances. We see in this year, there is some relative stability of the future facts that are significant due to our national political questions as well as international questions, wars, for example. We have been more conservative in this year. We are not following the previous policies of paying out dividends quarter- to- quarter.
We are going to wait how the year progresses to understand if we are going to keep the policy of more frequent dividend payout or if we are going to retain the cash in the company because of the macroeconomic effects, national and foreign. We are going to wait for the next quarters to have a clear view of Brazil and the world to understand how we will behave in relation to dividend payout.
Thank you.
Our next question comes from João Pedro Rodrigues, XP. You may now ask your question.
Good morning. Thank you for taking my question. I have two questions. The first one is regarding provisioning for contingencies and cancellations. I would like to see how these two lines are evolving in terms of operating expenses. What is your motivation for the behavior of these two lines? The second question, I would like you to talk a little bit more, if you can, about what you will announce a partnership with Verde in the real estate funds. I would like to understand a little bit more the scope of this partnership and if you think your area of partnerships will be able to create more solutions for you.
Good morning, Juliano here. Thank you for your question. Let me answer first about cancellations. For now, cancellations are in line, and nowadays we have in our portfolio cancellations that are very well aligned with what we expect. Of course, after the floods that we had in the past, we were at a special moment, but we have been dealing with this well. We have seen a slight increase in part of our portfolio. It is a part of the portfolio that we began with negotiations after the floods that happened, which was our way of trying to deal with that crisis. We were more strict in the negotiations. We had a slight oscillation.
But within the whole portfolio, we barely notice it. By the end of the year, we have been working with cancellations that are in line, and we do not expect any news, any improvement or any worsening of this situation. I would like to take advantage to also think about strategically, which is the partnership with Verde Fund. As I commented before, we see a decrease in the high-end, middle, upper middle income, a decrease in this market in Porto Alegre regarding the volume that the market can absorb. But we see a percentage of selling that is very good. We started more active with Open, which is Minha Casa, Minha Vida. It has been performing very well. As we see this in Brazil too, in other companies in this segment, affordable segment.
The company that operate in the level three, the publicly traded companies have not entered in our market. We see this very optimistically, that the city of Porto Alegre, we see very few construction sites in this segment. In the future, this will improve our results in the way we structure this segment. The other activity that we have been increasing is the partnerships, which is different from other Brazilian companies. This is a branch of the company that makes real estate investments in other developers. We already invest in nine developers, and four of them are companies that in Porto Alegre operate in smaller projects, and the other ones are in Santa Catarina and São Paulo.
We have great expectations about this project and its ability to add value to these companies, and also, especially in São Paulo, to enable us to buy some land, which we know is challenging in São Paulo. Especially mid-size good companies. This partnership with this fund, the Green Fund, it's a long-term project, and we believe we have a significant volume to raise funds in the swaps. We do not have an operation in São Paulo and traditionally speaking, a vertical way. We operate by allocating capital in other projects. With Verde Asset Management, we built a fund that in partnership with other developers, we purchase land. This term is swaps, and occasionally, now we can participate in parts of these development projects, and this is a way of us allocating capital.
We see this very positively because we have been able to participate in these projects that bring very positive in very good areas of São Paulo, in very good neighborhoods. These are very well-located projects, and thanks to my experience when I was at Even. This fund gives us this tool of acquiring land that do not use companies' cash and gives us the possibility of having partnerships with very good companies like Uni. We also have some projects with Even in Nova Conceição neighborhoods. We're going to bring more details in the future. We're very happy with this strategy. It gives us a very ample and diversified view for now, getting away from the concentration of Porto Alegre, but we do this responsibly in terms of cash and production capacities.
Thank you.
Thank you. I would like to remind you that to ask questions, you must click on the Raise Hand or Q&A icon at the bottom of your screen and type in your question to join the line. Our next question comes from Mateus de Martini, investor. He congratulates you on your results and asks concerning dividends, what we can expect.
Thank you, Mateus. I have already commented on this, but it's important to reinforce this, that our strategy is to be a company that has low cash burning and high dividend payout. This is still our strategy. We signal this quarter- by- quarter, year- by- year, considering the circumstances of the moment. We are going through a very turbulent moment now, which makes it difficult to understand the mid and long term, especially in Brazil. We have some important political questions here and also international questions like wars.
We have been more conservative of not paying out dividends every quarter. But we are going to wait a little bit more to see ahead what the scenario will be in Brazil. Another factor that has to do with a company like ours, which is capital intensive. We have the moment, consider the opportunities. Usually, big opportunities come where capital is scarcer, is more expensive, like the current moment. We have been able to take advantage of these very interesting opportunities concerning the purchase of land. These are opportunities that we are taking advantage of when the crisis allows us to make some investments in terms of purchasing land.
Considering these factors, we are going to have a year that will need more analysis, especially in the next two quarters, to understand if by the end of the year, we are going to do our usual dividend payout policy, which is determined the percentage of this payout.
Our next question is from Rafael Perez Soto. What are the partnerships with other companies like, especially in Santa Catarina and São Paulo states? Are we going to have new launches this year from these partnerships?
The first part of your question is more ample. Our partnerships have been performing very well. We have been able to get the moment right. The real estate market in Santa Catarina is booming, and in São Paulo, it has a strength of its own. In São Paulo, we have some difficulty of purchasing land. In Santa Catarina, they want to work with companies that are more structured. We were able to close partnerships that are very interesting, involving very good land. This in the future will bring us very good results.
This is improving our figures. In São Paulo, we are going to have two launches this year. In Santa Catarina, in relation to São Paulo, we have a one-year delay. Our partnerships are very important, but launches will increase naturally, probably in the second quarter. But in the coming years, it will increase. Thank you for your question.
We have one more question from Gustavo Fabris from BTG. You may now ask your question.
Just one other point I'd like to make here regarding Minha Casa, Minha Vida. You signaled feeling more comfortable in growing with Open units. My question is, how you see the scenario of supply and demand for this segment in the city? A broader view of Minha Casa, Minha Vida in Porto Alegre and how Open will benefit from the new master plan in the city?
Thank you for your question. It helps us to share with everyone a vision for this region, for this year that's not so clear, so obvious. It's a very particular situation, and we think it's very interesting to give it some context. The affordable segment, as we know, it has grown a lot in these past few years. In Porto Alegre, this growth didn't happen for some circumstances, especially the geographic circumstance. We did not have land that was suitable for this affordable segment.
S econd, because national companies, the Mexicans, did not come to Rio Grande do Sul, and the floodings that happened made Brazilian companies look at this region with more caution, and this created a vacuum, an emptiness for Rio Grande do Sul. Even with the positive circumstances all around Brazil and with Rio Grande do Sul with high income, this didn't happen in the state because of this crisis. We see this opportunity. We have been working on this for six years, slowly. We have launched and delivered some projects in this segment, but within Melnick. This was us following the learning curve. We were able to build a very interesting land bank because the crisis in the middle-income segment allowed us to buy land in Porto Alegre, probably 60% lower than it used to be.
We were able to build a very significant land bank in Porto Alegre for projects in the affordable segment of Minha Casa, Minha Vida in regions that never had this kind of project. But we have been very conservative analyzing the risks involved in this. These are few construction sites within the city of Porto Alegre. These are not several construction sites spread out. We understand now, last year, we were at the moment after four and a half years of operating the segment to build a company exclusively for this segment. The launches have been happening, and they have been happening in a way that makes us very enthusiastic because we have been able to preserve the average price.
We are operating just in the highest, the level three and beginning of level four, which is a segment in the affordable that is closer to our average income. With this operation, we have been increasing our land bank through swaps, very strategic lots. Our expectations are high. We do not imagine a very fast growth in this segment because we are very conservative. We are working to understand the operating issues, not just commercial issues, but operating issues that may cause a problem. We understand in Melnick's future view. We see Open as something that will gain relevance in our figures, but not an exponential growth, which is not part of our strategy. It's not how we understand the real estate market.
We remind you that to ask questions, you must click on the Raise Hand or Q&A icons at the bottom of your screen and type in your question to join the line. The Q&A session is now closed. Melnick's earnings call concerning the results of the first quarter of 2026 is now concluded. The investor relations department is at your disposal to answer any further questions you may have. Thank you all for attending this earnings call, and we wish you a good day.