Morning, and thank you for holding. Welcome to Melnick's earnings call concerning the results of the second quarter of 2025. 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 Mute Original Audio button. We would like to inform you that this event is being recorded 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 in 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 icon Raise Hand or Q&A 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 your microphone 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 risk, 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, CEO, Mr. Juliano Melnick, CFO 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. Thank you for attending Melnick's earnings call concerning the second quarter of 2025. Let us begin by going over the highlights of the quarter in slide three. The box on the left-hand side of the slide shows we had BRL 355 million in net launches in the quarter.
In addition to the BRL 172 million in net launches by Melnick Partners, which is the company's vehicle for participating in real estate developments in partnership with other companies. In the next box, we show you the BRL 324 million in net sales in the quarter, representing a 64% increase in inventory sales when compared with the previous quarter. The box on the right-hand side of the slide shows the BRL 39 million in net income corresponding to a gross margin, excluding financing, of 29.8%. Moving on to slide four, we can see in more detail the launches in the quarter. They amounted to BRL 402 million of gross PSV launched in the quarter and net PSV of BRL 355 million from two launches in Porto Alegre, Gama, 1375 and High Garden Iguatemi.
Add to that the BRL 172 million Melnick's share in launches from Melnick Partners São Paulo Unit in partnership with Even in the Casa Madalena project. In slide five, We highlight the operations of Melnick Partners business unit. We are currently operating in four states, Rio Grande do Sul, Santa Catarina, Paraná, and São Paulo, through nine partner companies, and eight projects have already been launched. That means around BRL 1.3 billion of gross PSV launched. Melnick's share is approximately BRL 500 million. Presently, we have BRL 4.2 billion of gross PSV already contracted as a co-developer and BRL 2.7 billion of gross PSV contracted as a consultant for Muse on the north coast of Santa Catarina, and in this case, our remuneration will come as a percentage of the profits from the development projects.
On the right-hand side of the slide, you can see an image of Casa Madalena, a project launched in collaboration with Even in this quarter. In slide six, we bring your attention to Gama, 1375 in the upper middle-income segment and High Garden Iguatemi, which due to its good sales performance, had both of its towers launched within the quarter. Let us now move on to slide seven, where we will discuss the company's net sales. In the graph on the left-hand side, we can see the VSO of launches in the quarter was 31%, and VSO on the inventory was 17%, which translates into an average VSO of 20% in the quarter. Net sales amounted to BRL 324 million, of which BRL 214 million came from sales of inventory and BRL 110 million from sales of launches.
The net sales in the first half of the year reached BRL 454 million vis-à-vis BRL 433 million from the previous half year, an increase of 5%. We point out the 61% increase in inventory sales when we compare the first half of this year with the first half of last year. The pie chart on the top right-hand corner of the slide presents the breakdown of sales by business unit, where you see that roughly 95% of sales were concentrated in the Incorporadora unit. Lastly, the bar chart on the bottom right-hand corner. When we look at the projects to be delivered this year, 85% of units have already been sold, and we still have the rest of the year to sell the remaining 15%. In the next slide, number eight, the graph on the left-hand side presents the company's deliveries.
In the first half year, they amounted to BRL 431 million of PSV delivered, and only two projects from our Urbanizadora business unit remain to be delivered closer to the end of the year. The right-hand side of the slide shows some information concerning our operating capacity. Currently, we have 18 active construction sites, 11 of those are in our Incorporadora unit, six in Urbanizadora, and one in Open unit under Minha Casa, Minha Vida program. We have over 4,000 units under construction for almost 1 million sq m . In slide nine, we present the only delivery in the quarter, which is 92% sold, in line with our track record of delivering our projects with over 90% of their units sold, and so virtually not increasing the company's inventory. In slide 10, we break down the company's inventory by year of conclusion.
The graph on the left-hand side, we can see we have presently BRL 1.318 billion rising inventory, with just BRL 11 million of it being finished this year. The graph on the top right-hand corner, we break down the composition of our finished inventory worth BRL 271 million . Only BRL 10 million of which refers to Urbanizadora. BRL 104 million are residential units, of which BRL 11 million is already leased. Our oldest lease-living inventory, the commercial units, including office spaces, stores, and hotels, amounts to BRL 158 million , and BRL 64 million of that is leased or are hotel units. At the bottom of the slide, we see the duration of our inventory at 19 months. In our slide number 11, land bank. We discuss our land bank. The box on the left-hand side shows we have BRL 4.1 billion of total PSV, and Melnick's share is BRL 2.9 billion.
It comprises 28 lots or phases, and BRL 500 million of which has already been approved. The box on the right-hand side shows our land bank broken down by business unit. Moving on to slide 12, where we present the company's financial indicators. You can see in the graph on the top left-hand corner that our net revenue in the quarter was BRL 338 million . The graph on the right-hand side shows the gross profit of BRL 89 million in the quarter, with a gross margin excluding financing of production of 29.8%. At the bottom of the slide, we present our net income in the quarter of BRL 39 million and net margin before minority interest of 14.8%.
It is important noting the evolution of our net revenue, profit, and margins when we compare the first half of this year with the first half of last year, when we went through the flooding event, which demonstrates the city's market recovery. In slide 13, where we demonstrate our capital structure. The chart on the left-hand side shows that we ended the quarter with a net debt of BRL 39.4 million , which translates into a gross debt of BRL 439 million , most of that due to financing the execution of projects under construction, and a total cash position of BRL 400 million . Shareholders' equity as of now corresponds to approximately BRL 1.69 billion . Our capital structure represents a net debt to equity ratio of 3.7%. In the quarter, our operating cash burn was BRL 42 million , and the operating cash generation was BRL 6 million.
This cash burn in the quarter was mostly due to land purchases by Melnick Partners business unit as part of development projects. It is important to point out that in the quarter, we had our first capital raise through pre-security to the amount of BRL 100 million . In slide 14, we demonstrate our track record of dividend payout from our partnership with Even in 2008 until our IPO in 2020. We had an average payout of 90%. Since the IPO, we have already paid out an amount equivalent to roughly 35% of the company's equity. It is worth noting that the total amount paid out since the IPO, total more than BRL 493 million , corresponding to approximately 73% of the company's market cap. Thank you all for attending this call.
I will now give the floor to Leandro, our CEO, for his final remarks, and then we will proceed to the Q&A.
Good morning. Melnick's figures for the second quarter demonstrate a solid, steady evolution comparison with previous quarters. We had significant sales performance, both in terms of volume and increase of prices, making our net income reach a level that we had planned for the year, and that also applies to our gross margin. When we compare these results with the same quarter of the previous year, 2024, we have to point out that that was the quarter in which we were affected by the flood. The figures demonstrate, therefore, a very important evolution because it was an atypical quarter. It is also important to consider that this was the first anniversary of the flooding, and Melnick has shown great recovery.
To me, this quarter, maybe under the symbolism of the first anniversary, marks the recovery of Rio Grande do Sul's economy and the return to normalcy of our operation when it comes to results. This is extremely meaningful since Melnick, as the largest developer in the state, may be a kind of thermometer of Rio Grande do Sul's economy itself. Another very relevant point in this earnings release is that we bring in Melnick Partner figures, which is work we have been developing for over four years in the search for a safe and solid way to do business with low risk and expand our operation into other geographies, allowing us to allocate capital not only in the region where we have great expertise, which is Rio Grande do Sul, but also in other states where we have reasonable knowledge of the real estate market.
We closed nine partnerships with well-established companies. We have already launched eight projects and already have a significant amount contracted for new launches through Melnick Partners, responsible for the partnerships with other developers, and also Melnick Consulting, providing consulting services, which besides being important to the bottom line in the search for real estate knowledge in other regions, will also allow us to allocate capital in these regions where Melnick is providing consulting. So this project, Melnick Partners and Melnick Consulting, gives us the possibility, as I said, to allocate capital in other regions. This is important because Rio Grande do Sul and Porto Alegre, which is where we operate, has suffered in the past four years, not only the macroeconomic effects of the interest rates, as well as the local economic issues that impacted our economy.
The flooding, as I have already commented, but also we had three years of severe droughts that negatively impacted the agribusiness industry, which is an important industry in our state. This, in turn, has depressed our purchasing power and the capacity to absorb real estate products. We opted very responsibly with long-term vision, discipline, and strategic planning to launch projects to the market only to the amount that the market could absorb. We are happy because acceptance of our products in terms of VSO, sales over supply, in these four years has been very positive. On the other hand, we are not able to implement the volume of launches that we would have liked, so we developed a few strategies.
One of them is Melnick Partners and Melnick Consulting, which brings us in a different format by means of partnerships, the launches in other regions that allow us to allocate our capital more responsibly. It is a project we are extremely enthusiastic about, and we have high expectations because it demonstrates from the beginning our capacity to build great partnerships in important regions that may open a very interesting path for the future of the company. I would also like to use this moment to point out within this period of four years, we also paid close attention to our shareholders. As we were not having the opportunity to intensify our real estate development, so as not to oversupply our primary market, which is Porto Alegre, we intensified in a healthy way and without irresponsibly leveraging the company, our capital distribution.
We have returned to our shareholders in these four years since the IPO, the accumulated amount of BRL 493 million. In current numbers, this would be equivalent to 73% of our market cap. Drawing another comparison, it is almost 85% of the amount raised in the IPO. We have been able to make sure that our shareholders have had a considerable dividend yield in this period when we chose not to increase the volume of launches. We created appropriate strategies with that goal, always with a long-term mindset and respecting the market where we operate. Thank you all. We are now available for your questions.
We will now begin our Q&A session. Remember that to ask questions, you must click on the Raise Hand or Q&A items 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. Let us now proceed to our first question, comes from Ruan Argenton, from XP. We will now enable your audio. You may now proceed.
Good morning, everyone. Thank you for taking my question. I have two questions here. The first one concerns the margins scenario. If we saw the company some time ago, we saw some slowdown in the margins in this moment, in a scenario of higher discounts. It has not been the case in this last quarter. I would like to understand what has changed in your sales strategies this year. What have you been doing? If you can tell us about the track record of this gross margin, it would be interesting. My second question is about provisions for cancellations.
We have seen a significant growth in this quarter, and I would like to ask you what was the reason for this increase, and what we can do about it.
Hello, Ruan. Good morning. Juliano here. Thank you for your questions. Let us talk about margins first. In reality, yes, this year we had a Melnick Day with good volume and without so much discount on our products. As time goes, in net terms, the net inventory decreases. We have an inventory of newer products that are more liquid, so we do not have to be so aggressive in discounts. This happened this year, and if this keeps going, we expect this will continue in future years, and we will be able to get rid of the less liquid inventory. Then this margin, considering this, we are going to have more liquid projects than less liquid projects.
I think margin from now on will increase. We'll be in line with what we have. In one quarter, it can be a little higher, a little lower, it depends on the launches. I would say it tends to this level. Concerning cancellations, every time we have a Melnick Day, we take a good look at our portfolio, what we have in terms of defaults, and then we push it a little bit. We have some of these cancellations or parts of these projects that are defaulting, then we can put them on the Melnick Day so we can give it more liquidity. The period before Melnick Day or on the day, we have a few more cancellations.
Next question is from Gustavo from BTG Pactual. We'll now enable your microphone and you may proceed.
Good morning. Thank you for taking my question. I have two.
The first one, if you could give us your vision regarding the Open unit. I think the program is doing very well. I'd like to see where your mind is at concerning the next years in terms of launches, and if you can see expanding your operation in other programs. The second is if you could talk to us about cash generation, what level you think we should have in terms of the second half.
Good morning, Gustavo. Leandro here. Let me talk about Open first and then about cash. Yes, we see with very good eyes, very positively. The Minha Casa, Minha Vida market has been having a very good performance in Brazil. In Porto Alegre, we had a peculiar situation. When we compare with the rest of the country, we had a few launches in this segment.
The crisis gave us the opportunity to build a land bank in places where Open and Minha Casa, Minha Vida were not in condition to do it. That is our land bank for a price that would enable us to launch this kind of project. We have been doing this for four years. It's part of our strategy now, this logic of trying to grow with low risk. We have been working in a more discreet form as we gain more knowledge. Now we think we find ourselves at a moment where the market is very positive, the inventory is very low. The government's actions have been incentivizing the consumption of this kind of product, and this lowered this inventory and incentivizing the development of this kind of project. Adding that to our expertise that we have built in these past four years.
From now on, we're going to intensify this a little bit more. We're going to expand our operation in this segment. We have been studying this, not aggressively, but always analyzing the conditions in terms of quality in the whole supply chain. Probably, in the coming quarters, we're going to bring here a bigger participation in this affordable segment, considering Melnick's operation. This is Melnick's understanding that it's different from previous years because we now have four areas in which we operate Melnick Developments. Urbanizadora, that has been having an important participation. Open, which is now getting more space within the metropolitan region of Porto Alegre. Melnick Partners. This makes us a little more aggressive in the way we allocate capital. We understand this model is the basis for our strategic planning for coming years.
Hello. Juliano here. Talking about cash generation.
Historically, Melnick is a company that works a lot through swaps, and it's a company that generates a lot of cash, and also a dividend payer in a recurring way. When we look forward, we see we probably have the payout of dividends probably a little ahead in the future. We are also looking at the partners, not the Melnick Partners, our usual development projects, and the opportunities we have to operate in the different regions we are operating in. Every now and then, this can mean the purchase of a piece of land that will incur cash burn. In the second quarter, we had some of this, some cash burn because of new projects that came into the comp, like Lorena, which is a partnership with Yuny, and the other partnership with Even, for example.
It's very difficult to give you a precise number, as we have space when we end up burning cash, when there is a new opportunity for a new development. This prediction of a forecast for a future cash flow is difficult because of these opportunities that we may have. Also in terms of paying dividends, paying out dividends, or buying land. Thank you for your question.
Our next question is from Vanessa Rocha. She's an investor. Could you give us more detail about the evolution of this partnership with Muse? Besides the project in Praia Bravo, I heard that we are going to have five more projects with Muse in Balneário Camboriú, amounting to BRL 10 million of PSV. Could you tell us a little bit more about these five projects and how Melnick will be participating in them? Could you give us a magnitude of the level of revenues we can expect and for when it's expected to be launched?
Good morning. To answer your question first, let's talk about Muse. It's a developer that we built a partnership with in the north coast of Santa Catarina. It's a beach called Praia Bravo. Let's explore a little bit more about what Melnick Consulting is. Let's explore more about this. Melnick Consulting, which we're working with Muse, it's the consulting arm. It's part of our strategy together with Melnick Partners. Melnick Partners allocate capital. It does partnerships. Melnick Consulting is a consultancy, and we do the whole development project. We structure the strategy, the sales strategy. In the construction, we have a recipe. So we have some revenue generated from this consulting service.
This gives us knowledge of the market to which we're offering this consulting, and this gives us a low-risk way of cash generation. The company needs to have very high knowledge of the region we are allocating capital in. In our contract with Muse, we have the second launch by Muse. We will have the option of how we're going to invest in these projects. By then, we're going to have better knowledge of the local market. We have been analyzing many projects that we are developing. The first one is a very large project with a very high PSV, I think around BRL 3 billion, in Praia Bravo. It's a partnership with Hotel Emiliano. I think this project will be very successful. I cannot tell you objectively speaking these questions regarding guidance in terms of new launches.
Muse's strategy is to grow in a responsible way, offering in that region projects that are different from the usual, with a more contemporary approach, and to position itself as a very high-end company. We started providing consulting services to them later with the option of investing in these projects.
Continuing, our next question is from Carlos Rocha, investor. He congratulates you for the results and the turnaround after the flood. Recently, the president of Sinduscon-RS has stated that the prices are outdated because of the pandemic and the flood. He suggested the prices should go up to a more healthy level. This is a good macro moment to reduce the interest rates and recover the economy with the potential master plan approval in Porto Alegre. What are the prospects for the second half of 2025 and 2026? How do you see, what kind of plan do you have to navigate in this new cycle?
Hello, Carlos. Juliano here. Thank you for your question. In fact, we see in our markets, we see the prices that are a little outdated. When you consider Porto Alegre historically, compared with other regions that are closer to Porto Alegre, like Florianopolis and Curitiba, we see that we're going to reposition these prices in other regions, and Porto Alegre hasn't recovered in terms of price yet. We had the problem of the flooding in the second quarter of last year, and this certainly helped to these prices staying behind. We have seen the high-end recovery, a little bit of these prices in these past few months. We talked a little bit about Melnick Day.
It was one of the first questions we had concerning our margins that didn't grow as much because of previous Melnick Days. In part, this happened because our region has been beginning to recover. It's very possible. What I can say is that the macro economy improving concerning interest rates and also our region that has been recovering from the floods. This will mean a recovery in prices, and of course, we're going to benefit from that because we are the biggest player in that region in terms of sales of current projects and also the possibility of launching new projects. As this recovery happens, it will be natural for Melnick to capture part of this opportunity. Complementing the answer, it's a question of interpretation here. We understand that the macroeconomic structure is very important in our industry.
We have studied this projection for these cycles, and we still see the scenario as very unstable in the future in these global coming years. We may have this more positive scenario, but also it may not happen. This makes Melnick position itself in a way that allows us to operate according to what happens. It's a company that's very healthy in terms of cash. It also gave us the opportunity to structure a good land bank through swaps in segments that they are not so benefit. It's a very low carryover cost. We are prepared for a positive evolution of the market. We have been monitoring this.
It is still a very unstable scenario, but our strategy is one of not promising cash and believing in this recovery, because it may not happen, so we cannot bet everything on it, but we are prepared to take advantage if the recovery happens.
Our next question is from Ivo, investor. Doesn't the company think about using their own resources to open a credit line? Think in terms of capital allocation also to reduce the inventory.
Hello, good morning. Thank you for your question. Juliano here. Yes, we have already done that, of financing directly, using the developer to finance directly the customer. We have a very healthy portfolio. If I am not mistaken, BRL 200 million worth of inventory, directly financed. We had more than that, but we end up selling part of this portfolio, so we have been working with this operation.
We have already been allocating capital with good interest rates to give the company good returns and to facilitate the sales of these units. Which for two people that have more difficulty financing with banks, or maybe the customer wants to divide this in installments in shorter periods, two or three years. This happens, so we already do it. We have already been doing this for some time. It is a good alternative for us and for the customers.
We have now received another question from Vanessa Rocha. She asks how Casa Madalena sales are coming along.
I will take advantage of this question to talk about the launch of Casa Madalena, which is the first launch from Melnick Partners in São Paulo using this structured partnerships. It is a partnership with Even.
We have a very strong relationship with that company, and it exemplifies in a very clear way this operation that is a more commercial operation of our strategy of growing through this partnership model with solid companies. Sales. Sales are doing very well. It is a pretty good launch. Even is the operator of all the real estate development, and our strategy of partnership is following this design, in which the local company, the one we are doing the partnership with, is the one responsible for the operation. And we enter as investor using our real estate intelligence of choosing good assets, where to allocate the capital. The launches came at raised good prices considering the region it is in.
I would like now to remind you that to ask questions, you must click on the Raise Hand or Q&A button at the bottom of the screen and type in your question to join the queue. The Q&A session is now closed. Melnick's earnings call concerning the results of the second quarter of 2025 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 call, and we wish you a good day.