Good morning, and thank you for holding. Welcome to Melnick's earnings call concerning the results of the third quarter of 2023. 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 check icon, 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. To ask questions, click on the icon Raise Hand or Q&A at the bottom of your screen and enter your question. 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. Fernando Marques, Administrative Director and Investor Relations. 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 third quarter of 2023. Let's begin by going over the highlights of this quarter in slide three of the presentation. We launched in the first nine months of the year Melnick share, a net PSV worth BRL 675 million , which is a 26% increase when compared with the same period of last year, and 10% higher than the amount launched in the whole year of 2022.
Our net sales in the same period reached BRL 594 million , a 13% increase when compared with the same period of last year. We have a solid cash position of BRL 448 million , and even after the payout of recurring dividends, our net cash position remains stable at BRL 166 million as of the end of this quarter. Finally, subsequent to the closing of the quarter, we paid out an additional BRL 40 million in dividends. In the year, this amounts to over BRL 107 million already paid out.
Now moving on to slide four, where we break down the three launches of the quarter. A special feature of the launches in this quarter in Porto Alegre is their location, in densely populated and consolidated neighborhoods, with a very short supply of new units. We launched BRL 452 million of PSV in the quarter. The accumulated launches in the year surpassed BRL 1 billion of gross PSV, and BRL 675 million when considered net PSV, representing an increase of 26% in the launched net PSV when compared with the same period of last year. As we had already mentioned in our last call, we have been growing our participation within our own businesses. So far, our participation, the gross PSV is 67% this year against around 50% last year.
In slide five, we can see a few images of the projects launched in the quarter. GO Bom Fim, which is a project comprising units with one to three bedrooms, with a gross PSV of BRL 154 million. Casa Moinhos, a very high-end project with great balconies and furniture designed by great national names with almost BRL 200 million in gross PSV. These two projects comprise our developer unit, whereas The Garden in the city of Canoas, we have just opened our third phase of this project from [Marechal Rondon ], where the first two phases are already hugely successful. Let's move on to slide six, where we discuss the company's net sales. The graph on the left-hand side shows that our SoS of launches was 38%, while SoS of inventory was 9% in the quarter, which means an average SoS in this quarter of 14%.
This quarter brought us BRL 178 million worth of net sales, virtually a 50/50 split considering sales of launches and inventory. Sales in the year until September amounted to BRL 594 million, meaning an increase of 13% when compared with the same period of last year. The pie chart on the upper right-hand corner of the slide, you can see the sales breakdown by business unit, where 93% of sales happened in our developer unit and the remaining 7% were in the Urbanizadora unit, in our open unit in the low-income segment. Finally, the bar graph on the bottom right-hand corner. When we look at the projects that will be delivered this year, you can see 91% of those units are already sold, which gives us one quarter to pursue the sales of the remaining 9%.
It is worth noting that the projects under construction to be delivered next year also present a high level of sales, with 82% of those units already sold. In the next slide, number seven, we break down the company's inventory by year of conclusion. We currently have approximately BRL 1.1 billion worth of inventory, of which only BRL 25 million are still under construction and will be concluded this year. In the graph on the right-hand side, we break down the composition of our finished inventory worth BRL 314 million, BRL 24 million of which is in our Urbanizadora units, BRL 110 million are residential units, and of which BRL 50 million is leased. Out of our leased liquid inventory, the commercial units amounting to BRL 180 million, a little over one-third of those BRL 65 million is leased.
I would like to draw your attention to our policy of reversible lease, where we give our tenants the option of purchasing their units using the rent paid totally or partially as down payment. We have been able to convert roughly one-third of these leases into sales. In slide eight, I will begin on the right-hand side, which is our projects under construction. Currently, we have 54 towers in construction on 19 active construction sites, where over 3,200 units are being built. This translates into approximately BRL 2 billion of PSV. On the left-hand side of this slide, we present information concerning the company's deliveries. We delivered three projects in the quarter for a total gross PSV of BRL 342 million.
In the year, we have delivered six projects amounting to BRL 571 million. Moving on to slide nine, we present the three deliveries in the quarter. The highlight is Teená, the largest high-end project ever produced by the company, which now has been delivered and has the largest type apartments in the city with 845 sq m . It is a sales success. As of now, we have only one unit that has not been sold yet. Casa Vista is also high-end and 100% sold. Casa Viva in the city of Santa Maria, also 100% sold. It is worth noting the sales performance of these deliveries practically without inventory.
In the next slide, number 10, we discuss the company's extensive land bank. Presently, we have BRL 5.3 billion of total PSV and BRL 3.7 billion of which corresponds to Melnick share, comprising 36 plots or phases, 37% of which have already been approved, giving us the opportunity to launch the best product for the market at the best moment, rather than just the next project in line to be approved. Now in slide 11, we present the company's financial indicators. We can see in the graph on the upper left-hand corner that the quarter's net revenue was BRL 259 million.
The graph on the right-hand side shows the gross profit in the quarter, BRL 38 million, with a gross margin excluding financing to production of 17.5%. We would like to make a remark. In the quarter, the company revised the accounting effects of three projects from Urbanizadora in the way the revenues from the swaps were recognized. In these projects, the swaps were physical swaps, but in the partnership mode, in which instead of swapping a percentage of the lots in the condominium, a percentage of each lot is swapped. The auditors decided that it was better to recognize these swaps as if they were financial swaps and account for them as the lots are sold. So we have reversed the recognition of the revenues in these projects, which will come back in future quarters as these lots are sold.
There have been no changes in the real results of these projects. If these adjustments had not been made, the company's gross margin in the quarter would have been at 22.5%, in line with margins of the company's previous quarters. At the bottom of this slide, we present our net income of BRL 15 million and net margin before minorities interest of 7.7%. Which was also affected by the event mentioned before. Now in slide 12, we present our capital structure. We ended the quarter with a net cash position of BRL 165 million, which translates into a gross debt of BRL 282 million, and almost all of it dedicated to financing production of our ongoing projects in a total cash position of BRL 448 million. Our shareholders' equity is BRL 1.2 billion, and our capital structure shows a net debt to equity ratio of 14.1%.
In the quarter, we generated BRL 17.7 million in operating cash and paid out BRL 33.3 million in dividends. In the first nine months of the year, our operating cash generation was BRL 45.2 million, and we paid out around BRL 67.3 million in dividends. Finally, in a subsequent event after the closing of the quarter, we paid out an additional BRL 39.8 million, totaling BRL 107.1 million in dividends paid out in the year. Thank you for your attention, and I would like now to give the floor to Leandro, the company CEO, for his final remarks. After that, we will open for the Q&A.
Good morning. We reached the third quarter, reaching our goal of increasing structured over the same period of last year. And we had 13% in sales. Melnick continues with its strategy of having financial solidity, cash generation, building a company that is a recurring capacity of paying out dividends. And in this year, we have totaled BRL 107 million paid out. Brazil has inflation under control and has been showing a clear reduction in the yield curve, which we will see in future months, improving macroeconomic conditions. And this fact, together with our leadership, Melnick's leadership in Rio Grande do Sul, and the quality of our land bank, results in a positive view of our results for following quarters. Thank you. Let's move on to the Q&A.
Now we will begin our Q&A session. I would like to remind you that to ask questions, you must click on the Raise Hand or Q&A icons at the bottom of your screen. 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. Let's now proceed to our first question. It comes from Elvis, sell side analyst for BTG Pactual. Elvis, we will now open your microphone for you to ask your question. You may proceed.
Good morning, Juliano, Leandro. I have two questions here. First, regarding the gross margin. In the quarter, there was an effect due to an accounting condition, but I would like to understand the speed of recovery of this margin. It seems that the margins have been going up. In parallel, we have been giving discounts, especially because of commercial inventories. I would like to understand this tendency for gross margins and also the trend for cash generation. You have shown that deliveries for next year are very well sold. I would like to understand what you are thinking in terms of cash generation, how you are going to pay out dividends, how much dividends you will pay out considering the strong distribution of this past year.
Hello, Elvis. Fernando here. Thank you for your question. Talking about gross margin, what we have been talking and showing recurringly, we still have finished units inventory above what we consider appropriate, so it has been punishing a little our margin. We have, as our objective, this year, next year, to reduce it even more. So we have a little bit of negative result because of this finished units inventory, but as of the next quarter and the next year, we will probably have some help from the gross margin of the land we have bought in cash.
What we have here in our planning is that this margin will increase by 2% or 3% starting next year and as of 2025. When we do not have this legacy anymore, this finished inventory, this will be close to 30%, maintaining more or less 50% in terms of what we buy in cash and what we buy keeping our swap strategy, which is very important in these moments in the worsening of the macroeconomic scenario. Regarding the cash generation, I will speak a little and then Juliano and Leandro can complement. We have just this year and next year, we have had many deliveries. We see a very important, very significant cash generation for the company. This year will end with BRL 1 billion, next year with a little over BRL 1 billion in deliveries.
This will depend a lot on the kind of size the company is going to have next year, what we hope and expect. Under normal conditions, not cruise flights this year, next year, we will keep on generating cash in a significant way, keeping our strategy of paying out the dividends. This is what we believe.
Elvis, just to complement, specifically regarding the swaps at URB, Urbanizadora, this result will go back to normal starting in this next quarter and next year because we have. We are going to have a very good cash generation, and as Fernando said, the company will be a company that distributes results and will not have the opportunity to use these resources to a further growth of the company. When the scenario changes, when the market expands, we can revisit this and dedicate the resources to a bigger growth, higher growth.
It will depend on the macroeconomic scenario. Complementing here from my strategic point of view, Melnick made a very strategic decision of monitoring and following some people in the years of 2021- 2022, a very conservative operation in terms of growth. The growth of PSV happens now. We have been consolidating 2024 and 2025 as a growth year, and the generation of value that this growth in our accounting structure, as we report results, starting with more intensity next year. As you saw Juliano present, the SoS of these projects that were delivered in this period, the market absorbed these deliveries very well.
We grew from the IPO in a region we dominate and absorbing this in our policy, which has been constant for many years, since our IPO, which is a company that is financially solid with high capacity of cash generation and profit and distribution of profit. We understand our shareholder. This recurring capacity of distributing dividends generates a lot of value. We have a company that has been reducing risk due to this characteristic of being solid and non-leveraged in our segment. I believe this year we have been showing this effect in our figures. We see our gross margin a little more compressed because of these finished units inventory, but we still generate cash, pay out dividends, and the value generation for the shareholders of the company will be our final goal.
Thank you. It is very clear. If I can just have a quick follow-up regarding the size of the company that Fernando mentioned. If the company will keep a cruise speed, the cash generation will be a little bit more conservative. What are you thinking in terms of growing? What is your pipeline of launches for next year? What is your macro vision? If you think there is room for more launches, or we should keep the company the same size it is now.
It is a good question. This year, we have shown a growth in relation to last year, and we have tested the market absorption because we have increased our launches, and these launches were very well absorbed. We will keep the same level as this year between the launch of PSV for next year, understanding the macroeconomic scenario will improve and stabilize. We are in this scenario of a continuous improvement in relation to the last two years, and we are going to stabilize. At the levels that we have launched this year, if this level stabilizes, we will reach our pre-IPO average of more than 100%.
This is the level of stability for the company. With an increase in margins due to the purchase of the land through cash, it was extremely concentrated in swaps before. The PSV this year will be stabilized, which will be twice the size of the PSV we used to launch. Just an observation, when Fernando talks about the PSV of this year, it will be the PSV until the end of the year. We still have some launches forecast for the next quarter. I am not going to advance which they are, but we already have some launch. It is not what we have launched until now only, but also it will include what we will launch in the next quarter.
Thank you very much. Good morning.
Our next question comes from [Lucas Bissai], from GIA Asset Management. His question is: Would you comment a little bit further on your strategy of lease plus sales of finished inventory? Does it generate value for the company or minimizes the impact in inventory? What is the cap rate average that you have been doing?
Hello, Lucas. Thank you for your question. Juliano here. This strategy aims first at reduce the carry trade cost of this. The market of commercial units is very restricted. These costs, we have been carrying them over. This will reduce the question of cost. Also, this mindset of convertible lease. We have been leasing this to people that in the future will have an interest in purchasing this unit. We comment this, that they will be able to use the money they have paid in rent, partially or totally in the first 18 months as a down payment for the purchase. This has made that around one third of these leases, one third of these clients end up purchasing the units they lease.
This is the possibility of having a new product, which is a leased commercial unit with a good history of payment, which is around 6%. The cap rate is around 6% yearly, 0.6% a month. It is a little over 6% a year. We lease these rooms so that it becomes these offices a little more valuable than the rooms that are not leased. Most clients buy these for investment. Very few of them buy these for their own use. So buying a product that is already leased, this is a certainty about the value of the product. This strategy has these two-pronged approach. It decreases the cost of the carryover cost and increases the value of the company. As the market becomes more warmed up, because the prices are very depressed, we may see an increasing value in the future. We may capture a little more value in the future.
Just complementing Lucas regarding the strategy for the company and the capital structure of the company. If you talk, if this is a certain, this logic of reversible sales, because our cash position nowadays is very solid, very robust, we understand that the other way of offering very aggressive discounts wouldn't be the best path for the company. We have been able to keep this model that Juliano mentioned, plus a recurring sales of these leased units after some period of, these periods, this conversion has been significant. So it's a question of the microeconomics of the local, which is the leased units generates a higher shelf life for use of this project. You have been recurringly able to convert these leases into sales. We are very happy with this policy. It has not been generating a devaluation in our units. It has been occupying our project and has been generating sales with this cash, with the sales of this inventory.
Thank you for your answers. We'd like to remind you that to ask questions, you have to click on the Q&A or raise hand and to join the queue. When you are called, a request to activate your microphone will show on your screen. Then you must activate your microphone and ask your question. I would like to remind you to ask questions, you click on the raise hand icon 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 your screen, and then you must activate your microphone to ask your question.
The Q&A session is now concluded. I'd like to tell you that the earnings call concerning Melnick's results in the third quarter is now concluded. The IR department's at your disposal to answer any questions you may have. Thank you for the participants and have a good day.