Morning, and thank you for holding. Welcome to Melnick's earnings call concerning the results of the first 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 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 queue. When you are called, a request to activate your microphone will show on the screen, and then you must accept 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, Leandro Melnick, CEO, Juliano Melnick, CFO and investor relations director, and Joelson Barbosa Boeira , administrative and investor relations director. I will now give the floor to Juliano Melnick.
Good morning. Thank you for attending Melnick's earnings call concerning the first quarter of 2025. Let me start off by going over the highlights of the first quarter in slide three of this presentation. The box on the top left-hand corner of the slide shows we had BRL 130 million in net sales in the quarter, exclusively from inventory. This is a 55% increase when compared with inventory sales of last quarter.
In the next box, we can see the BRL 282 million worth of deliveries in the quarter, 95% of which has already been sold. The box on the bottom left-hand corner of the slide highlights a generation of operating cash to the amount of BRL 48 million, where we ended the quarter with BRL 252 million in cash. The next box shows the decrease in capital that took place in the quarter to the amount of BRL 150 million, which was paid back to stockholders on March 28th, yielding 22.5% of the company's value to the stockholders. Moving on to slide four, we break down the launches of the quarter. We can see there were no launches in the first quarter of this year. The quarter was fully dedicated to selling inventory and to the preparation for the Melnick Day, which took place on April 5th.
Also to the preparation of the launches that are coming now in the second quarter of this year. Let's now move on to slide five, where we discuss the company's net sales. The graph on the left-hand side shows the inventory VSO was 10%, and since there were no launches, the average VSO in the quarter also remains at the same 10%. We had BRL 130 million in net sales, all of it concentrated in inventory. It's worth noting that this was our best result in inventory sales considering the past few quarters, only lower than in the first quarter of 2024, which is when last year's Melnick Day happened.
In the pie chart on the top right-hand corner of this slide, we have the breakdown of sales by business unit, where we see that around 90% of sales were concentrated in the developer unit, and the remainder was equally shared by the other two units, Open and Melnick Urbanizadora. Lastly, in the graph on the bottom right-hand corner of this slide, when we look at the projects to be delivered this year, we see that 86% of units have already been sold, which gives us the rest of the year to sell the remaining 14%. In the next slide, number six, the graph on the left-hand side shows the company's deliveries. Which in the first quarter of the year amounted to BRL 282 million of PSV delivered, and this is practically half of the volume expected for the year.
The right-hand side of this slide shows some details about our operating capacity. We have currently 19 active construction sites. 12 are in the developer unit, six in the Melnick Urbanizadora unit, and one is a Minha Casa, Minha Vida project in the Open unit. Presently, we have over 5,000 units under production, adding up to almost one billion square meters. In the seventh slide, we break down the four deliveries in the quarter, which are 95% sold on average and virtually do not add anything to the company's finished inventory. We highlight the delivery of Arte Country Club, a high-end project next to Porto Alegre Country Club, and a huge sales success, as well as two deliveries from our Open unit, one in Canoas and the other one in Porto Alegre. In slide eight, we break down the company's inventory by year of conclusion.
The graph on the left-hand side shows that we have currently BRL 1.242 billion in inventory, but only BRL 30 million of which will be finished this year. The graph on the top right-hand corner of the slide, we break down the composition of our finished inventory worth BRL 301 million, of which only BRL 6 million is at Melnick Urbanizadora. BRL 125 million is residential inventory, of which BRL 20 million is leased. And the oldest least liquid inventory, the commercial units comprising offices, stores, and hotels, amounts to BRL 171 million, of which BRL 68 million is leased or are hotel units. The box at the bottom of this slide shows the duration of the company's inventory, currently at 25 months.
It's worth noting that after this year's Melnick Day, which happened after the closing of the first quarter, there was a reduction in the company's inventory as well as in the duration of this inventory, and this will be reported in the next quarter. On the next slide, number nine, we discuss our land bank. In the box at the top of this slide, we see that we currently have BRL 4.8 billion of total PSV, and BRL 3.3 billion of which is Melnick's share, split into 32 lots or phases, and roughly 23% of these have already been approved. The box on the bottom left-hand corner of this slide shows the composition of our land bank, and our developed unit has roughly half of it. The next box shows the changes to our land bank, where we added BRL 341 million to it.
Moving on to slide 10, where we present the company's financial indicators. We can see in the graph on the top left-hand corner that our net revenue in the quarter was BRL 225 million. The graph on the right-hand side shows the quarter's gross profit of BRL 51 million and the gross margin, excluding financing to production of 27.2%. At the bottom of the screen, we present our net income in the quarter, BRL 13.4 million, with a net margin before minorities interest of 9.4%. Coming to slide 11, where we present our capital structure. In the chart on the left-hand side, we ended the quarter with a net cash position of BRL 2.5 million, which represents a gross debt of BRL 349.7 million, mostly concentrated to financing the projects under construction. The total cash position is BRL 352.2 million.
Currently, shareholders' equity is approximately BRL 1.083 billion, and our capital structure represents a net cash-to-equity ratio of 0.2%. In the quarter, we had an operating cash generation of BRL 48 million, and we burned around BRL 102 million in the year. I would like to point out that the cash burning in this quarter happened due to the reduction in capital of BRL 151 million that happened on March 28th. Moving on to slide 12, we demonstrate our track record of dividend payout. From the beginning of our partnership with Even in 2008 until our IPO in 2020, our average payout was 90%.
Since the IPO, we have already paid out an amount equivalent to 27% of the company's shareholders equity, and after the approval at the OGM to pay out the profit balance of BRL 27.8 million from last year, by the end of 2025, at a date still to be determined by management, we will have had 100% payout in the year 2024. Finally, the last slide of our presentation, number 13. We point out that in an ordinary general meeting that took place on April 29th, 2025, a dividend payout was approved to the amount of BRL 27,794,406.73. And this amount will be paid in full until December 31st, 2025. Thank you for your attendance. I would like to give the floor to Leandro Melnick, our CEO, for his final remarks, and then we will proceed to Q&A.
Good morning. In the first quarter of 2025, we did a very important movement of reducing our capital, and the objective was to adjust the size of the company's equities to the operating value that we see in the coming months in seeking to improve the efficiency and profitability of the company. In this quarter, we prioritized the sales of inventory, and we carefully prepared the launches for the year that we're beginning the second quarter. This movement made selling expenses of pre-launches to go down and of Melnick Day's expense, while sales will happen on a concentrated way in the second quarter. I highlight that Melnick Day had a very positive performance, which will contribute to the continuity of sales of inventory of the finished products and under construction.
We had operating cash generation that was important, showing that our company is very sound financially and therefore with capacity of paying out dividends. We advanced in our area of partnerships, Melnick Partners. I have already announced partnerships with Santa Catarina and São Paulo, where we see a very important channel to diversify our operation and increase our results. Thank you very much.
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 queue. When you are called, a request to activate your microphone will show on the screen, and then you must accept it to ask your question. Let us now proceed to our first question. Comes from Elvis Credendio from BTG. Elvis, we're going to open your audio. You may proceed.
Good morning. Two questions. The first one regards the pipeline of launches. We did not have launches in the first quarter. I would like to understand what you're thinking in terms of the quarters you're going to launch in this future quarter. What we can think in terms of volume, if it's going to be close to what was last year or if there will be an improvement? The second question regards the cash generation. What you are expecting in terms of deliveries this year, selling of finished inventory, and what the consequence will be to cash generation?
Hello, Elvis. Thank you for your question. We are analyzing the launches for the year. It will be close to what happened last year in Porto Alegre. We prioritized this first quarter of the year, focusing on selling inventory, and this went very well.
We also had the question of the accounting issue. The pre-sales of the year happened in the first quarter. Melnick Day was very important to us. They will happen now in the beginning of the second quarter. When we see this partially, the numbers, the figures for the year through the first quarter, a concentration of selling expenses in the first quarter without the contribution of sales, both for Melnick Day and launches. Since Melnick Day has already happened, we have a very clear vision of the figures, which were very positive and will help to contribute, reducing our inventory, both finished inventory and also the projects that are being launched, which have already been sold very well. Our deliveries have been showing this. We have been able to deliver our projects at a very positive level of sales.
The impact in the next quarter, Melnick Day's impact in the next quarter will make this. Breaking down the issue of launches, the planning in terms of volume will be similar to last year's. We are in pre-sales now for some projects that will be launched in the second quarter, and they are moving along very well. This is making us very happy, very excited because the event we had has surprised us, even ourselves. It surprised us. These projects that will be launched now are making us very confident, feeling positive. We analyze the performance of these launches so we can decide for future launches. But in principle, our planning is to have a similar volume as it was last year's.
I'd like to point out that Melnick's strategy through making partnerships with a very successful process and execute this outside of Rio Grande do Sul, Santa Catarina, Paraná. We are very well aligned with this, and we're going to add our launches in Porto Alegre with the participation in this project in partnership with other developers and builders. But this is going to start this year. This process will be very positive considering the coming years, and these launches through partnerships will be very positive. Concerning cash generation, we had a very good one in this quarter, which gives us thinking of keeping this strategy of being a company that's light in terms of financial structure, to be very light. We see something similar to last year, being a cash-generating company.
Both our dividend payout policy as well as this policy of establishing partnerships in other states, I think cash generation will give us this comfortable situation.
Thank you.
Before we proceed, we'd like to remind you that to ask questions, you must click on the Raise Hand or Q&A icons at the bottom of the screen and type in your question to join the queue. Our next question is from Melissa Rocha, an investor.
Good morning. I have heard Leandro commenting a few times that he considers ROE one of the most important metrics for a company. Considering that Melnick's ROE is still very low, what is the company's strategy to increase this ROE? Or you consider it appropriate for the company. Do you work with the possibility of further reductions of capital?
Hello, Melissa. Thank you for your question. It's an important one. Yes, conceptually speaking, I believe very much that a company's focus should be generating a higher ROE, the most profitability possible for their stockholders. Melnick works towards this objective. As soon as we reach the goals we have planned, so now we have this line where we understand we're going to try to grow. This, we believe, is very possible, and this is going to start happening this year. We have some history that we can explain. Of course, last year we had those floodings in Rio Grande do Sul that affected our results. It affected the profitability of the year. But we are planning a ramping up of the ROE since the IPO.
This brings to the year's sequence an increase in the completion of the construction work that was paralyzed last year, and this will help us with our result. One of the strategies we are pursuing is a reduction of capital, because our market was not absorbing the volume of sales that would lead us to a positive result in terms of ROE. We made this adjustment that we thought was important to allow us to build in future quarters a growth curve of profitability for the company. We did not see a continuity in this strategy. It was an occasional strategy. I think the company is very well-adjusted after this movement.
We see that the company's cash generation, the strategy we are pursuing of being a company that's not leveraged, very sound, financially speaking, and we will continue this policy of paying out dividends. Through this dividend payout, we also have a way to regulate the size of our equity and consequently our ROE.
Another solution that will affect the profitability is the strategy that we're very excited about, which is this strategy of working through partnerships that's been proving very efficient in Santa Catarina and São Paulo. This contribution of these launches through partnerships will help us increase our profit, and consequently, it will lead our ROE to the level that we consider appropriate.
Continuing, our next question comes from Juan Argento from XP. We are going to enable your audio so you can ask your question.
Good morning. Thank you for allowing me to ask questions. I have two questions. The first one is if you could give me some update regarding financing production, how you see this scenario, if you have been feeling some difficulty? How you see this scenario of funding construction moving forward. The second question is how you see the possibilities of growing moving forward and the impact of Melnick Day in this growth.
Hello, Juan. Thank you for your question. Regarding the financing of the production, our situation, I think, is very comfortable if you consider what's happening in Brazil, which is some companies facing more and more difficulty to credit lines. Concerning the cost of financing, which is very close among the companies, we have been very comfortable through our main partners that finance our projects, with an amount that within the current scenario, it gives us range of costs that we consider very good. Melnick is in a very comfortable situation concerning capital structure and financial solidity, soundness. We are very confident that we don't foresee any problem concerning this aspect.
We see this as a competitive advantage. In Porto Alegre, this ability to get financing credit lines is very difficult. In São Paulo, companies are larger, more structured. We see that other companies are not being able to finance their production. The fact that we are in this well-structured situation in our local market, this is a competitive advantage, and in the future, we see the competition suffering out there.
Juliano here, talking about the gross margin. Although we had a Melnick Day in the second quarter of the year, we believe the gross margin will not move because we're going to have the launches. The more launches we have, the more the gross margin is held back. We'll see a slight increase—t hank you for your questions.
Next question comes from Ilmo Da Silva, investor.
Good morning. Does the company have any forecast of stock buyback?
We do not have, at the moment, any program of stock buyback. In the short term, we are not planning to do this. We are prioritizing the continuity of the policy of dividend payout. We understand that in this moment, in which the economy has very high interest rates, I think financial soundness is very important. Keeping us financially sound and with cash generation, which is important to our figures, we intended to channel this to continuing our dividend payout policy instead of a new stock buyback.
Our next question comes from Tiago Diamante, investor.
All Urbanizadora's projects in the coast were very successful, selling very quickly, but the largest inventory, if I am not mistaken, is the commercial units. What is the company's future strategy to sell? Is to focus on residential projects to purchase to focus on Urbanizadora or developer?
It is an interesting question regarding the operation. First, our inventory was really concentrated in the commercial units. If we analyze the company more deeply in the last few quarters, we have seen that all the projects under construction have been having a very good performance. This is where the finished inventory was concentrated in the office space, the stores, and in some partnerships with hotels. In the first quarter, we focused on working on lowering this level of finished inventory, and Melnick Day had the same focus. The performance was very positive. We had a quarter focusing on reducing this finished inventory that was more concentrated on commercial units. Regarding the Urbanizadora, the projects had a fantastic performance.
It has been two years that the projects, not only on the coast but in other cities, this last development, have been very positive. We have been growing our land bank, but more in the long term for new projects. We intend to keep a similar level of launches, but the performance has been very positive in this segment. Melnick is working in several segments to take advantage the best way possible of where we think we have the best markets. Concerning the purchase of land, we have seen an increase in the low-income segment, which is our Open unit. We have had very good performance in these past four years. We had a few launches that was our learning curve, and they were successful. Now we have been working more emphatically in this segment, and the selling performance has been very good.
Probably in the future earnings calls, we are going to talk more about Open, and also we are going to talk more about partnerships in other states, because, as I have already said, this will bring a more relevant and more significant financial activity for the company.
Our next question comes from João Antonio Fernandes, buy-side analyst.
Could you talk about the administrative costs? We have seen selling expenses that were very high in a quarter with very few launches. How are these administrative expenses impact the next quarters?
Hello, João. Your question is important because we see that we analyze the figures quarterly and the developer focus more on the long term. The figures behave in a different, in a more structured form. What happened in this quarter that we had high administrative expenses because we had Melnick Day, which we have already mentioned, and we incurred in a lot of expenses to make this event happen. In some projects, we had the pre-launch. It means a sales stand, conventions, market. Sales of these two movements, Melnick Day and the launches, will happen in the second quarter. It's a temporal question. It's a question of timing. When we analyze this in a split way, the quarter balance, we see this mismatch. We had a concentration of expenses in one quarter, namely the first quarter of 2025, because of pre-launches and Melnick Day.
The result will actually be accounted for in the second quarter. This mismatch happens occasionally, but when we analyze the year, these issues will become evident and will be regularized. The accounting figures will be at a level that we seek, which is a very competitive and healthy level.
The Q&A session is now closed, and Melnick's earnings call for the first quarter of 2025 is now concluded. Melnick's investor relation department is at your disposal to answer any questions you might have. Thank you all for attending. Have a great day.