Good morning, and thank you for holding. Welcome to Melnick's earnings call concerning the results of the third quarter of 2024. 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 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 questions- and- answers section. 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 activate your microphone to ask your question. We would like to clarify that any statement 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 on 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, Leandro Melnick, CEO, Juliano Melnick, CFO and Investor Relations Director, and Joelson Boeira, Administrative and Investor Relations Director. I will now give the floor to Juliano Melnick.
Good morning. I would like to thank you all for being present today at Melnick's earnings call concerning the third quarter of 2024. This was the first quarter following the climate events that hit our state.
As you will see during our presentation, our market reacted and we are back to normalcy, with launches happening, sales responding positively, and construction work back to its normal pace. In this quarter, we also had the end of our successful partnership of over 15 years with Even, and we are prepared for a new cycle, which our CEO, Leandro Melnick, will comment on in his final remarks. That being said, let's move on to slide three of our presentation, where we will talk about the highlights of the quarter. In the first box on the upper left-hand corner of this slide, we see BRL 843 million of net PSV launched in the year. Even in the face of the floods, this number is 25% higher than in the same period of last year and 15% higher than all the volume launched in 2023.
In the box next to it, we see the volume of BRL 601 million in net sales in the year, in line with the same amount sold in the same period of last year, even with our operations shut down for a few weeks during the floods. In the last box at the top, we observe an SoS of 53% for the launches in the third quarter, which demonstrates the good acceptance of our four launches. In the first box on the left-hand side at the bottom, we can see BRL 102 million of operating cash generated this year, an increase of 126% when compared with the same period of last year. In the box next to it, we show our financial robustness with BRL 520 million in cash, of which BRL 176 million represents net cash.
Finally, in the last box, we have BRL 36 million of net income in the quarter with a 31.2% of gross margin. In the next slide, number four, we can see the four launches of the third quarter, where I highlight the great performance of GO Moinhos, which has already sold approximately 80% of its units. The opening of the third and last phase of Grand Park Moinhos, which was slated only for next year, highlighting the huge success of this development in Canoas. Moving on to slide five, where we break down the company's launches. At the top of this slide, we have the breakdown of the four launches in the quarter, which amount to BRL 225 million of PSV, Melnick's share.
It is important to point out that we resumed the launching after the climate event that took place in the second quarter, both in Porto Alegre and in Canoas. In the graph at the bottom of this slide, we can see an increase, compared to the same period of last year, of 25% in net launches, going from BRL 675 million to BRL 843 million. Which means a participation in the gross PSV going from 66.7%- 84.3%. As mentioned in the highlights, this BRL 843 million in net launches already mean 15% more than all the PSV launched last year. In slide six, where we will discuss the company's net sales. The graph on the left-hand side, we can see the SoS of launches in the quarter, which was 53%, while inventory SoS was 4%, yielding average SoS of 12% in the quarter.
In this quarter, we were highly focused on the sales of launches, which performed very well, as well as in the sales of finished inventory. Net sales totaled BRL 168 million, 5.6% less than in the third quarter of last year, but 175% more than in the second quarter of 2024. All in all, we had BRL 48 million in sales of inventory and BRL 120 million in sales of launches. In the pie chart on the right-hand side at the top, we break down sales by business unit, where 82% of sales came from the developer unit, approximately 15% came from Open through the Minha Casa, Minha Vida program, and the remaining balance came from our Urbanizadora unit. In the bar graph on the bottom right-hand side, when we look at the projects to be delivered this year, 91% of these units have already been sold.
It is important to point out that the deliveries to be made in 2025 are also selling very well, and only 17% of this inventory is left. The next slide, number seven. In the graph on the left-hand side, we can see the company's deliveries, which in 2024 totaled BRL 127 million of delivered PSV. It is worth noting that at the end of October, we delivered the project Botanique, adding nearly BRL 130 million to the PSV delivered this year, and we still expect it to deliver an additional BRL 381 million of PSV from three projects by the end of the year.
Let me point out that the pace of construction work has already been normalized, and all the delays resulting from the floods that affected the state of Rio Grande do Sul in the second quarter of 2024 have already been accounted for in the forecast of future deliveries. On the right-hand side, we have some information concerning our operating capacity. Currently, we have 27 active construction sites producing roughly 4,800 units in 720,000 sq m under construction. Moving on to slide eight. We will show you the four deliveries scheduled for the fourth quarter, which are already 91% sold. As mentioned in previous slide, Botanique has already been delivered. In slide nine, we break down our inventory by year of conclusion.
In the graph on the left-hand side, we can see that at the moment, we have BRL 1.34 billion in inventory, and only BRL 62 million of it refers to products to be delivered this year. In the graph on the top right-hand corner of this slide, we break down the composition of our finished inventory worth BRL 250 million. BRL 10 million comes from Urbanizadora, BRL 71 million comes from residential units, and BRL 31 million of this is leased. Out of the leased liquid inventory, the commercial units, which amount to BRL 169 million, BRL 73 million of it is leased or refers to hotel units. At this point, let me remind you our reversible lease policy in which we give our tenants the opportunity to acquire their unit using totally or in part the rent paid as down payment.
We have been able to convert roughly one-third of these leases into sales. Finally, in the graph at the bottom of the screen, you can see the duration of our inventory, which currently is at 20 months. The next slide, number 10. We discuss the company's land bank, which is currently worth close to BRL 2.7 billion, Melnick share, and 20% of it was paid in cash. As of now, around 21% of this land bank has already been approved, giving us the opportunity to launch the best projects in the market at the right moment, rather than just the next project in line to be approved. In the pie chart on the right-hand side of this slide, we break down our land bank by market segment, and approximately 55% corresponds to middle and upper-middle income segments. On slide 11, we show you the company's financial indicators.
You can see in the graph on the top left-hand corner of the screen that the net revenue in the quarter was BRL 246 million, a 5% decrease when compared with the third quarter of 2023. In the year, the net revenue was BRL 632 million, a decrease of 21% when compared with the same period of last year. The graph on the right-hand side shows the gross profit in the quarter. It was BRL 67 million with a gross margin, excluding financing for production, of 31.2%. In the year, gross profit was BRL 127 million against BRL 140 million in the same period of last year. Gross margin was 23.9%, almost 20% higher than in the same period of last year, which was 20%.
At the bottom of this slide, you can see our net income of BRL 36 million in the quarter, and net margin before minorities interest of 21.3%. In the year, net income was BRL 37 million with a net margin of 11.2%. Getting to slide 12, where you can see our capital structure in the chart on the left-hand side of this slide. We closed the quarter with a net cash position of BRL 176 million, which translates into a gross debt of BRL 343 million, essentially concentrated in financing the construction of ongoing projects and a total cash position of BRL 520 million. Presently, shareholders' equity is approximately BRL 1.21 billion, and our capital structure represents a net cash to equity of 14.6%. It is worth noting we are a company with essentially no corporate debt.
Finally, in the chart on the right-hand side, we see that in the quarter, operational cash burn amounted to BRL 9.7 million, and in the year, we generated BRL 102.2 million in operating cash, and we paid out BRL 41.4 million in dividends in the year and BRL 98.7 million in the last 12 months. In the final slide, number 13, we show our track record of dividend payout. From our partnership with Even in 2008 until our IPO in 2020, we had a 90% payout average. After our IPO, we paid out the equivalent to roughly 21% of the company's shareholders' equity, a payout of nearly 100%. Thank you for your attention. I would like now to give the floor to Leandro, the company CEO, for his final remarks. Following that, we will open the Q&A session.
Good morning.
The results of this quarter show a significant piece of information regarding Rio Grande do Sul's economy after the great floods that affected the state. We'd like to share the Melnick in the city of Porto Alegre, adding this to the characteristic that the purchase of a property goes through the confidence the buyer has in the sell. It shows that the high absorption of our launches in this quarter point to a positive recovery and surprising recovery to the economy in Rio Grande do Sul. We launched in this quarter four launches in different segments for a total of BRL 225 million of PSV, which was 53% of these units sold. With the good commercial performance in terms of price, this impacted our gross margin and the results of the company in the quarter. In this period, we also had important changes in the shareholder base of the company.
Even concluded its process of divesting, closing our partnership that started in 2008. The 16-year-old partnership between these companies was one of the most highly successful partnerships in the country. When we formed this joint venture with Even, up to that moment, we went from a family company in the high-end industry, that we were not even among the top 10 companies in the Rio Grande do Sul, to the first company that is publicly traded in this state. We generated net profit over 800 million BRL and 90% of dividend payout. More than 100 projects launched, 16,000 units in this period corresponded to 2.3 million square meters built, with more than 10,000 active clients at this moment. This partnership also presented solid results to Even, and I would like to take advantage of this opportunity to thank Even and wish them huge success.
With this, the manager, Melkar Investimentos, Melnick Participações Investments, now holds almost 47% of Melnick shares, giving the market a signal that the founders really trust the solidity and the everlasting position of the company. Thank you.
Thank you. 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. Then you must activate your microphone to ask your question. Our first question comes from Ruan Argenton, XP Investimentos. We will now open your microphone for you. You may ask your question.
Good morning, everyone. Thank you for taking my questions. I have two points I would like to discuss. First, regarding launches.
You commented on the presentation that the first nine months of 2024, the volume of launches had a significant growth. My question is regarding understanding what you see in terms of forecast for 2025, if you are going to grow this number of launches. What is the leverage for this growth, if you see that some segment is more interesting to leverage this growth. My second question is regarding gross margin. You showed a very important growth in increasing gross margin. I would like to understand effectively what boosted this increase in gross margin and what we can expect from now on. If you expect this level to stay.
Thank you, Ruan. Regarding the launches, we understand that the volume will be watched quarter-over-quarter. We will see the relevant impacts the floods had. But this quarter was very positive concerning this announcement.
We are planning to maintain this volume at a level that we will maintain this volume for next year, but with attention. Melnick positions itself in a way that we respect the absorption from the market, and this can be very volatile. But we also search for leverages that will boost our growth inside the company. It means we have a relevant land bank. Most of this land bank has already been approved. We have a very comfortable cash position. We try to work within the volatility, which is common in the Brazilian real estate market, in the Gaucho real estate market. We always watch carefully the absorption by the market quarter-over-quarter. This can vary a little, but the company is prepared to speed up launches very quickly if we understand the market is ready for it.
We have a plan, a volume of launches that is similar to the ones we have now, but it will depend on these conditions. We have been increasing responsibly with a very careful look at the emerging economy segment to observe an increase in launches in this segment. We have seen this in the last three years using our Open unit. This movement that started back a few years ago, and we have been ready to improve, increase the number of launches in this segment because it has been showing a good result.
Juliano here. Let me talk a little bit about the margins. The company mainly bought its land through swaps. Now we have been buying land in cash. It is natural that there is some variation quarter after quarter, the sales of launches, and the margins are very good.
We can see that this increase in margins, and from last year to this one, and basically if this number will remain at this level, 27%, 28%, 30%, it will depend on the quarter. We can see this mix of products that every quarter it happens in a slightly different way. We have been pursuing an REF Margin that we have been pursuing.
Thank you. Our next question comes from Elvis [Inaudible]. Your microphone is open. You may ask your question.
Good morning, Leandro, Juliano. My question refers to cash generation. You have presented the deliveries for the fourth quarter. You have a high volume of deliveries, but at the same time, the company has been growing Melnick's percentage in these launches. What does this reflect on the cash generation? Can we hope the company to continue deleveraging?
How does this talk to the company's policy of dividend payout? Are we going to keep this high payout, considering the company has been growing this percentage of participation in the projects and the purchase of land in cash? If you will channel these resources to land purchasing. How do you understand to allocate this capital?
Elvis, thank you for your question. Melnick has a very consistent policy regarding this issue. We are not a leveraged company. This concept of leverage, it is not usual in this segment, in this industry, but our characteristic is in all our presentations, in all this past quarter, we talk about our history of dividends. It has been 15 years since we began our partnership with Even. This model of auditing, considering it was a public company. We have had an average of 90% dividend payout, generating cash to pay dividends.
This is because of capital structure that we created, in which the composition of buying land with cash from investors, which allows this growth without consuming a significant cash and helping the company be deleveraged. We are going through a process of growth more than other years. Maybe we are going to have a future balance between cash generation and cash burn. Our company is highly deleveraged, so our tendency is, yes, to keep consistently generating cash and pay out significant dividends and maintain our 15-year-old average of 90% a year. This shows that this format that is unusual is very possible.
Thank you. Our next question comes by text from Mateus.
Good morning. What is the company's strategy regarding leverage?
Hello, Mateus. Thank you for your question. Our strategy is linked to our last answer. We see the company as a non-leveraged company, so it is a light company.
Some changes may happen from quarter to quarter, slightly, but our strategy is to be not leveraged and continue generating cash, which allows us to pay dividends in a consistent way. Taking advantage of your question, let me point out that our gross margin on a first analysis may be understood as smaller than or lower than other companies. In reality, it is a set of indicators that is part of our strategy. The real image you should see our company is as a very healthy company. But because we keep this structure of purchasing land back from investors, our margins are usually smaller. When we do this in a consolidated way, the margins are lower. But we have a cash burn to sustain this growth that is much reduced because we know our industry burns a lot of cash to buy land.
We sell and then we come to financing for our production. This is part of the company's strategy. It has been going on for 15 years. Our financial structure is designed for this objective, huge growth and low leverage and paying dividends.
Our next question comes by audio from Cambauva, BTG Pactual. Your microphone is open. You may ask your question.
Good morning. My question is about inventory. It is a follow-up to what you have been discussing. When we look at the inventory, especially the finished units inventory, especially commercial units, we still have a high volume. You have been working on leasing these units. My question is if you think you can develop a strategy to speed up the sales of finished inventory, whether it be a bigger sale, like wholesale to a real estate fund.
If you have been thinking about a different kind of structure that would unlock this value of this finished inventory in a faster way. Because when we see where the share price is being traded against this value of inventory, we could unlock a lot of value in a quick way and bring this capital faster into the company.
Cambauva, thank you for your question. It is a good question because it allows us to go over some important issues. We have to break down the analysis of inventory. In these past few years and the vintages in which we have been producing, it is a very positive, it has been very well-absorbed in our history. This would lead to the conclusion that the inventory should be low.
On a second level analysis, this residual finished inventory is dated from older projects, older launches, and this is important to consider, because when you see a high finished inventory, without going deeply into it, we may come to a wrong conclusion. You think that the launches are not selling well, the absorption is low. But the delivery of our projects, we usually deliver it 90% sold, and this has been going on for a few years. This finished inventory is composed of some part of it comes from stores, some part of it from offices, part of it from hotels. These are, in most cases, projects that sold very well, more than 90%, from different projects. We structured this idea of leasing to enable the price and sales were very low, so to increase this.
And that was the strategy that we developed, but bring this to the market. We repositioned it at a sale price that the market would absorb. And in this last quarter, we had a very good sale performance of this inventory. We have been lowering this inventory. It is an older inventory. Of course, when you do a general analysis, we include the new finished inventory from new projects. But when you look at this older finished inventory, it has been showing a positive increase in sales. And we understand that in a few quarters more, this will be reduced significantly without structured selling it to some kind of fund. And this connects to the last two answers. When you look at Melnick, this is a company with a high equity that is not leveraged.
And this is great information because we have these assets in the company, which we do not need right now to generate cash for the company's growth. So the sale of this finished inventory will happen in future quarters at a normal pace, quarter over quarter. And this will generate cash and will generate the capacity of continuing growing and using this part of this capital for the projects that we will deliver in the future.
Thank you. Have a good day.
Our next question comes from Ivo Da Silva, investor.
What are the company's prospects considering Selic at 13%?
Thank you for your question. This is a central topic for the Brazilian economy. We have a peculiar question that mitigates the problems, the serious problems that are caused by a high interest rate. And one of these is something we have mentioned, which is the company's economic situation.
It is a company that has no leverage, and we have a positive cash position. We have a shareholder's equity that is way above our debt. So because we are not leveraged, this affects the company less. And your question regarding the Selic interest rate, this is going to impact the financing for production. This will impact the industry. But in our case, because we are a non-leveraged company, we have a good standing with the banks, and this puts us in a privileged position. So it is something to be considered. It impacts the market as a whole. But our company is in a better position than other companies that have a higher leverage. Another point is the segmentation. Melnick is a company that operates in a limited geographic region, but in all segments, and this is very important.
We wanted to build, and we want to work this idea of work in all segments to give us flexibility during the Brazilian economic cycles. So right now, in the emerging, in the affordable segment, the performance is very good. And in the high end, it is also reasonable. And the high Selic affects the capacity of financing. And the fact that we are in all the segments, it brings us flexibility to operate in the segments where the impact is lessened. Of course, it impacts the interest rates, but the way the Brazilian programs go, we are in a good position.
Our next question comes from Adriano Valente.
The company is showing great recovery considering the climate events. Do you see the company paying dividends in 2024?
Thank you for your question. As I have been saying, the company's strategy is towards this. So the answer is affirmative.
We have a strategy of generating cash, and we have no debts, so we can pay dividends. We will continue working towards this goal of generating value to shareholders in the way we understand a company shows less risk considering the economic situation of our country. But sustainability of this policy, this strategy, allows us to be a great dividends payer. It is the company's strategy to follow in this direction.
Our next question comes from Paul Shareholder.
The land acquired in the first half year is more than 8,000 sq m. Could you give me more details about the purchase of this land?
Paul, thank you for your question. We do not have here the intention of breaking down our land bank and showing our strategy, our positioning to the market. This is a lot that is very good.
Melnick has very good position in this purchasing of land bank. It will generate cash in a positive way, especially when you consider portal like this market that was affected by the floods. Our competitive advantage was very good. In this moment of very active economy, these waves of IPOs, it is a very positive moment. So differentiation of having a good cash position gives us advantages. In this moment, we have a good cash position. We have a very good significant land bank, and this gives us the ease of mind to buy only very good land. We have a very simple discussion internal. We are only go on good opportunities, and our position gives us this possibility of only buying land that we believe is very well suited to the market. Because our land bank structure gives us this comfort.
We can put it to you in a conceptual way that we believe very much in this particular piece of land. It has very singular characteristics considering where it is located. But I would not like to go into further details.
The Q&A session is now concluded. We now give the floor back to the company for their final remarks.
Thank you all. We thank you for all the questions. Our investor relations department will answer any other question that might not have been answered. We have an investor relations structure that is ready to answer all of your questions. Thank you all.
Melnick's earnings call concerning the results of the third quarter of 2024 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.