Ladies and gentlemen, good morning. Thank you for holding, and welcome to MRV's third quarter of 2025 results conference call for analysts and investors. Today with us, we have the CEOs of the company, Rafael Menin and Eduardo Fischer, and the Chief Financial and IR Officer, Ricardo Paixão. We would like to inform that our participants will be listening only during the company's presentation. After the company's remarks are completed, there will be a Q&A session when further instructions will be given. To open our third quarter earnings call, I would like to hand it over to Mr. Rafael Menin.
[Foreign language].
Good morning, everyone. I would like to thank you for joining another MRV&Co earnings call. I begin by recalling my speech from the previous quarter regarding the Minha Casa Minha Vida, My House My Life program ecosystem, which has been positively impacted at the federal, state, and municipal levels. We continue to see a government that is largely in favor and vocalizing projects or improvements to the Minha Casa Minha Vida program. States are also continuing to work on expanding regional checks, and finally, we see more and more cities adapting their master plans. I can mention Belo Horizonte, for example, which has just undergone a significant change, making affordable products less costly and more affordable to the lower-income population. The combination of these changes has an explosive effect, giving this already very strong market an even greater capacity to absorb a growing demand in the lower-income segment.
Speaking now about MRV, the third quarter was another quarter of progress in virtually all operational and financial metrics. Looking at accumulated figures in the last nine months, I would highlight a few key indicators. First, the accumulated or annualized EBITDA of BRL 2.2 billion is a substantial increase compared to last year. This growing EBITDA brings with it a significant reduction in the EBITDA-to-Debt ratio, which reached 1.1 times in this quarter. Another super important indicator is ROL. The accumulated net operating revenue for the year is BRL 7.4 billion, showing an increase of almost 20% compared to last year. Speaking about this quarter, we have reached an important level of profitability, achieving an income of BRL 200 million. What supports the evolution of these financial indicators? It is the evolution of all operational metrics.
As we've been seeing for some time now, cost, which is a combination of lower-cost land and controlled construction costs, has been playing a very large role or importance in the recovery of the gross margin. On the other hand, the sales price continues to advance slightly above inflation. This combination of costs that are not growing or are very well controlled and sales prices that continue to grow slightly above inflation allows us to improve the company's gross margin each quarter. Now, what did not go so well? The gap between transfer and production. We built 3,000 units year to date and transferred 25,000 units. Production increased compared to the previous year, and as mentioned before, at a cost that was flat year on year, which is very good. On the other hand, transfer did not grow.
It was flat in volume, which delayed the recovery of cash generation, even though it was much better than in 2024. What we expect going forward in the fourth quarter is that transfers, considering that we had those problems with regional checks and also the weaker first quarter in gross sales, we expect to overcome these two issues. What we should see in the fourth quarter is transfer slightly above production, making cash generation dynamic from now on, quite different from what it was in the first three quarters of 2025. To conclude my remarks regarding MRV, I would like to emphasize that we have a unique platform. We are the only company in Brazil that has launched around 600,000 apartments throughout our history.
We have unparalleled accumulated knowledge of the cities where we operate, a much larger geographic presence than any other company, specialization, and tacit knowledge of each market we operate in. I have total confidence that this is a major competitive advantage for the company. It is also important to emphasize that we continue working with great humility, dedication, and discipline to keep delivering even better operational and financial indicators quarter after quarter. Now, speaking about Urba, I am very excited about Urba. Urba is a company that has a unique business model. It may be the only real estate developer in Brazil with an asset-light model, a company that can securitize its portfolio during the construction phase. It is also crucial to highlight the turnaround achieved by the Urba team in recent quarters.
The company in this year of 2025 is already generating cash, it's profitable, and has a very high-quality pipeline to continue delivering better operational and financial results each year in the coming quarters and years. Finally, I'm going to talk about Resia. As previously mentioned, Resia has an important and highly relevant project for MRV&Co, a project in which Resia has proposed to sell over $800 million in assets, which will cause Resia's balance sheet to look completely different in a few quarters. It will be a much smaller balance sheet and with very little debt. Along the way, Resia will also be a leaner company with lower G&A and a different operating strategy. Resia's new projects require little to no capital. We recently delivered a highly successful project in Miami, where we're starting a project in Texas with this super light capital stack.
That is the Resia of the future. As a company that will undergo significant deleveraging, we announced that Resia has a goal of generating nearly $400 million in cash for MRV&Co by the end of next year. We are confident that this plan will be well executed within the promised time frame. Furthermore, there will be few new projects, but they will be high-quality projects with a funding model or capital allocation strategy very different from what Resia had in the past. I thank you all for being here. I will now hand the floor over to Ricardo Paixão, who will go into a little more detail regarding the financial indicators.
Thank you, Rafael. Good morning, everyone.
I'll start by talking a little more about the operations at MRV real estate development, where the highlight was the net profit of BRL 204 million achieved in this quarter. Our results were also marked by good operational progress, with net sales of BRL 2.45 billion in line with the previous year, 9% below the second quarter of this year. Sales volume would have been close to BRL 3 billion if we hadn't had delays in the regional checks payments. Units produced increased by 3% year on year and 11% quarter on quarter. Strong sales volume and improved production result in increased revenue. Net operating revenue was BRL 2.65 billion, 5% and 15% higher than in Q2 2025 and Q3 2024, respectively. Our gross margin indicator continues to improve.
We closed Q3 2025 at 30.7%, an increase of half a percentage point versus Q2 2025 and 4.1 percentage points versus Q3 2024. This trajectory is supported by a combination of healthy gross margins from new sales and land from poor margins periods. On the expense side, we had commercial expenses in line with the second quarter of 2025 and higher year on year, closing the quarter at BRL 234 million. G&A, on the other hand, grew less than revenue, resulting in a G&A to ROL ratio of 5%. EBITDA closed the quarter at BRL 523 million, a positive development as it was 12% higher than the second quarter of 2025 and 59% higher than the third quarter of 2024, which confirms our operational improvement. The adjusted financial result was better than that of Q2 2025 and the year-on-year comparison with Q3 2024.
Since we started transferring receivables through sales in pro soluto portfolio this year, we noticed a 6.5% reduction in transfer liabilities compared to September 2024. Net profit of BRL 204 million was 62% higher than in Q2 2025 and 3x what was achieved a year ago. Moving on to the balance sheet, I would like to highlight that MRV real estate development operations reached break-even in the third quarter of 2025 in terms of cash generation, excluding assignment of receivables. This was achieved due to improved gross margin, units, and execution, despite having produced 2,000 more units than we transferred in the quarter. So far, we have produced 5,200 more units than we transferred. This has a significant impact on the company's cash burn. For the fourth quarter, we have a different dynamic with more transferred than units produced, which will boost cash generation.
Looking at the indebtedness in Brazil operation, we closed Q3 2025 with net debt to annualized EBITDA of 1.11x , 38% and 13% better than a year and a quarter ago, respectively. In Q3 2025, our debt covenants returned to more comfortable levels, with the net debt plus real estate payable as a percentage of equity reaching 0.5 versus the limit of 0.65. In the coming years, we'll see these indicators improving even further with the execution of the deleveraged process. We'll now move on to the Q&A session. Thank you. Thank you. We'll now start the Q&A session. If you want to ask a question, please press the reaction button and then click on raise hand. If your question is answered, you may leave the queue by clicking on lower hand. Our first question comes from Santander.
[Foreign language].
Hello. Thank you for taking my question. I have two questions.
First, if you could talk about the evolution of transfer of units from phase two in Minha Casa Minha Vida in Amazonas. Also, I would like to understand about Resia. First, how are negotiations to sell projects? When do you think we can start seeing tributary being sold, given that it is quite stable? I would like to understand what is the expected time frame to sell this project. What could we expect in the future regarding recurring results from Resia? We are having a hard time projecting what will be the company in the future, its G&A looking forward. While the property is with you, there is some revenue being generated, but what could we expect in terms of costs as well? I know you do not provide specific guidance for Resia, but this would be very helpful in our projections. Thank you.
Hello, good morning.
This is Rafael speaking. Regarding transfers, the dynamics for the fourth quarter is, I'm talking specifically about Manaus. It has evolved regarding the third quarter, but we cannot say for certain that we will finish the year without any liabilities. There are still 45 days until year-end. Some weeks are better, others are not so good, and it's certainly better than the third quarter, but still insufficient to be able to ensure that we would close the year with no liabilities regarding regional checks for Manaus. Regarding Resia, Tributary is in a sales process already, and I believe there is a reasonable chance of executing the agreement this year, but the closing will not be in the year of 2025. Closure will be in the first quarter of 2026.
There are also some plots of land being negotiated at the final agreement stage, maybe closed this year or the first quarter in 2026. I'd say that in general, we continue to follow our plan. The capital markets in the U.S. have improved; it's improving quarter on quarter, although at a worse level when compared to three years ago. I'd say that every quarter we'd see better improvement with slightly lower caps, and so we are confident that this dynamic will continue to improve in coming quarters. As a consequence, we'll be able to successfully deliver on the plan we proposed some months ago. Speaking of net income, there are two events going on. First, we'll make a new reduction in Resia's G&A. It has started in the fourth quarter, and it will be completed up until the first quarter of 2026.
Resia will be even leaner than it is currently. Another important aspect is that the NOI of each project becomes more positive as we rent more units. The projects are delivered, and it was operating with all costs. As we rent the projects, we reach a break-even point of NOI at 70%. Looking at the fourth quarter, in this line of expense, OpEx and revenues from projects, which is NOI, there would be some improvement compared to the third quarter. First quarter next year will be even better. Aside from financial expenses, the other lines, NOI from projects and G&A, will have improved results every quarter. Did I answer your question?
Yes. Thank you, Rafael. Just one more update. We have talked about this in the past. How is that study of the possibility of the PODs plant being able to sell to other companies?
Is that feasible? Could that help in reducing G&A by improving operational leverage of the plant? No news there. It is possible. In the last four months, we've been working on it, but so far we cannot say for sure that we'll have a sales agreement signed to sell to other companies. The U.S. market is large. The hotel industry uses a huge volume of PODs. We are trying to access that industry. We're prospecting so far, and there's nothing concrete so that we could give details now.
Wonderful. Thank you very much.
Great, funny. Nice to have you here.
[Foreign language] . The next question comes from Pedro Lobato from Bradesco BBI.
[Foreign language] .
Good morning, everyone. Thank you for the question.
I would like to know from you how you have felt this first four months of the fourth quarter in terms of sales, and what about launches between the fourth quarter and 2026? If you give us some color on MIX, bracket one, two, and three, whatever you can provide us in terms of expectations, is good. Also in terms of cash generation, I understand there is a bottleneck in terms of cash check payments. Mas thinking about dynamics in a normalized scenario, how do you expect to be the cash generation between operational and portfolio business? Thank you.
[Foreign language] .
This is Fischer speaking.
[Foreign Language].
Regarding the fourth quarter, we had a good October. November is also good. In terms of sales, we're doing well. Doing well. There's an important weekend here.
There will be a large number of selling events, which boosts our sales. All news are helpful to the company because there's a lot of discussion being made about the reduction of caps and improvement to the program, and that helps us to sell more. In the sales front, the fourth quarter is coming strong. As for budget, we had a very good October—or launches, I'm sorry, in terms of launches. October has been good as well as November, and we believe that fourth quarter will be better than the third quarter. We expect to close the year with higher launches than 2024. In terms of income brackets, we do not see much change there. We still have 25% of our sales at level one, 35% at level two, and only 5%-7% sales in level four. The rest is level three.
This dynamic should not change much. As these levels are adjusted, which will likely happen at the beginning of next year, this will help us improve this mix. That is always good because this red one limitation is always helpful for us. Looking at the fourth quarter, this is what we have. With regards to 2026, we believe that there will be a growth in launches in 2026. Our operation will be even stronger than in 2025, given that the scenario is quite positive. We have seen in recent years that movements like we had this week regarding changes in the Minha Casa Minha Vida housing program are positive. The market is strong, and we will be able to benefit from it as like no other company in the market.
We believe that we'll continue to, this will continue to be enforced, and also we will improve operations in 2026. There's no reason why we shouldn't see a stronger year next year. Regarding your question about cash, I didn't understand your question so well, but as Rafael says, since we have an improvement in our issue, which is the transfer of units in Manaus, there was an improvement. When regarding the third quarter and the overall dynamics of transfers of the company is better, we expect to have a stronger generation, cash generation in the fourth quarter when compared to the third quarter. Continuing with these dynamics, cash generation will increase not only because of transfers, but also because there are more transfers. You will see a cash generation in coming quarters considerably better.
Thank you, Fischer. That's very good.
Nossa próxima pergunta.
The next question comes from Ruan Argenton from XP.
[Foreign language].
Good morning. Thank you for the question. There are two topics, two topics I would like to address.
[Foreign language].
First, I'd like to talk a bit more about these improvements to Minha Casa Minha Vida housing program. Recently, we've had news about the subsidies, and I would like to understand how you see the positive impacts of that on your operations. If there could be a reduction in pro soluto.
[Foreign language]?
Especially in the north of the country, we know that there is a transfer in regional checks and subsidies have grown. I would like to understand your prospects.
[Foreign language]?
We see a significant reduction in the adjusted metrics quarter on quarter.
Now I would like to understand the effect, the amortization of transfer liabilities. But given that there has been a reduction, a strong reduction, how do you expect that to progress in the future? Should we continue to see progressive drops in adjusted financial results in the Brazil operation? Thank you.
This is Fischer speaking. Ruan, I'll answer the first one, and Cacá will answer the second. In the north of the country, there was an increase in subsidies to BRL 65,000 initially, but it's highly concentrated within bracket one. There are two lower sub-brackets in salary. The one up to BRL 100,000 has a higher benefit, which is a low income for us. We won't capture much regarding this specific movement in the north as for capturing benefits. We always look product by product, city by city, to try to see how to benefit from that.
This has to do more with price and margin. With projects in which products which we are close to the cap, then we move towards price. In products in which there is some gap regarding the cap, we try to reduce pro soluto. It is a mix of these two variables that we consider, and we make a product by product analysis. There is an additional benefit we did not mention that with the reduction in taxation, as we will not have taxation up to BRL 5,000 next year, our families fall into that category very well. As we talk about the price caps and the income caps for next year in the towns, there is an additional financial capacity gain from our clients, and a significant amount are couples, husband and wife. There is an additional benefit to be captured starting next year, given the surplus in income that will be available.
We are very optimistic about next year as the tailwinds will only help us. In addition, we've noticed, Ruan, look at what's going on in the market of São Paulo. São Paulo's market is at its current state given changes in laws that happened 10 years ago. That's clear. What we can see more intensely, especially in last year, is several cities that we operate making movements similar to what São Paulo did some years ago. The benefits we could have from this, Rafael mentioned Belo Horizonte, but not only Belo Horizonte, Campinas, Rio de Janeiro made changes in laws that will benefit MRV, but also additional benefits that we could have.
When you look at all that together, we look at 2026 and 2027 in an optimistic way because there are additional benefits in several fronts that will enable our customers to access properties in addition to the operational gains we achieved. We are optimistic in general about everything. Now, Cacá will answer the second question.
Good morning. There are three main impacts we had: reduction in financial expenses. The first point is regarding transfer liabilities. We have a part of it will be mitigated by IPCA inflation rate. As indicator of IPCA was lower in the third quarter than in the second quarter, we had a positive impact. There was a discount that was lower in transfers. The volume was lower than that impacted by BRL 18 million. The advance and expenses by lack of recognition on the portfolio. And we had an equity swap.
The share increased in value in this quarter, so there was a BRL 25 million positive impact. Looking forward, how should we see this financial result line? We will start to generate cash again, so leverage will decrease. Consequently, financial expenses will also drop. Currently, our financial expenses with transfer is including all on-balance operations we did in 2023 and 2024, and all off-balance sheet operations that we had in 2025. In 2023, we will not have the impact of the portfolio of 2025 as well as at 2023. Our expenses with transfer liabilities have reached this peak in 2025. Looking forward, there will be a reduction because of this impact that I mentioned, that now we have on-balance and off-balance portfolio expenses added. Okay, that is a very thorough answer. Thank you very much.
Our next question comes from Carla Graça from Bank of America.
[Foreign language] .
Good morning. Thank you for the opportunity to ask a question. I have two questions. First, net income. You mentioned that you lack about BRL 300 million to meet the guidance of this year. In addition to Minha Casa Minha Vida, that will help you in this process, is there any other item that might be helpful? The next BRL 200 million for the quarter will reach around BRL 800 million for the year. How do you see this possibility? What would be the main risks that would prevent reaching this level? The second question is about Resia. Could you comment on the demand for those assets? Will you be able to sell the amount you foresee, or do you expect to sell more towards the end of the year, next year? Thank you.
Carla, this is Ricardo speaking. First, about the net income.
Considering the dynamic of the gross margin that is recovering 30-40 basis points per quarter, this is an assumption we have. Another important assumption is that MRV is the only company that discloses sales after the sale has been transferred. We are talking about guaranteed sales. What we consider is that we had an important impact on lack of transfers that resulted in lower sales recognized in the third quarter. In addition to stronger sales in the fourth quarter, we will also have a drop in this backlog of transferred units in the third quarter. Accounting or book sales in the fourth quarter will be strong. We also expect a drop in the backlog of what was not booked in the third quarter.
These two effects together will get us closer to the expected BRL 3 million of net income, which will then allow us to reach the bottom of the guidance. Is it clear?
Yes, thank you. Now, regarding the sales of Resia assets in 2026, what we see forward is that we're comfortable with the execution of our plan. We have established a deadline to sell assets until the end of 2026. We've seen several articles in the U.S. newspapers showing how the rental market is recovering. The main driver is the drop in interest rates. U.S. interest rates were reduced, but new reductions are expected. This will allow us to sell the properties at the levels we established. We are continuing to rent units.
There's one asset that's stabilized, and three other properties will be stabilized until the end of the third first quarter, and giving us a lot of time to perform on the projects' sale until the end of next year. Four plots of land were sold in the third quarter. Others are being negotiated for the fourth quarter. We are keeping to the plan of selling that figure of assets next year.
Okay, that's great. They're very clear. Thank you.
Our next question comes from Gustavo Cambaúva, from BTG Pactual.
[Foreign language] .
Good morning. I have two questions. First, could you talk a bit more on the gross margin dynamics? I know you are running a little bit above guidance. And those issues have been mentioned about the improvement on the program.
The cost dynamics have slightly improved in comparison to what we thought it would be. What do you expect for gross margin? Will it continue growing? What is a figure we could work with for next year? The other question is about cash generation. Just to understand a bit this backlog in transfers. Rafael mentioned that it has improved, but it's not at the best level possible. I would like to understand this dynamic of transfer, given how long it takes to register the properties. Will this cash be recognized in 2026? Will it only be collected next year? Maybe we won't have time to process everything at the deeds, registry, etc. There is a mismatch between production and transfer. Do you think that this would move to the first quarter of 2026?
When it is normalized, when you transfer more than you're building, given that there was a backlog of units that generated cash burn this year, do you think that the first quarter of 2026, or first semester of 2026, this would be normalized and then having a cash generation above normal? What's the dynamic expected? Thank you. [Foreign language] . Good morning, Cambaúva. Okay, gross margin. The cost parameters. We can add the construction cost and land cost. The sales price parameter, as it is increasing, since both are evolving, they put us at a margin level of 35% around it. That includes cost, ex-interest, that would be 38.5%. That's the current sales margin. However, there is a displacement of one year and a half between the margins we sell today until it becomes the margin that is booked.
Since we reported 30.5%, 30.7% in this quarter, each quarter, as Cacá mentioned in a question that was previously answered, the gross margin will continue to grow until in the end of next year or first quarter of 2027, around that period, the company will report a gross margin close to 35%. Continuing with this movement of prices going up slightly above inflation and costs in our case continuing to be below inflation. Eventually, the gross operational margin will reach, will be close to 35%. Once again, the book value gross margin will have a one and a half years of delay when compared to the gross margin of the production period. Is it clear?
Yes, thank you. Okay, about cash. There are three important metrics. First, production. Second, transfers. And the third metric is the registration of that transfer.
What happened in the first periods is that we built 30,000 units, transferred 25,000 units, and we registered about 26,000 units. This gap between production and transfers was due to two reasons. One is the checks, that we failed to transfer 1,500 units, but there was a lack in gross sales, especially in the first quarter of the year. We did not do well in the gross sales in the first quarter. We talked about that in the past, that transition from real estate brokers. We are reinforcing the house channel. Looking month by month, there is an almost constant evolution dynamic. Gross sales are increasing. Consequently, we have more raw material to improve, to grow transfers. Finally, we believe that regional checks, a good portion of them, will be solved until the end of this year, if not all of them.
Given that the states we operate in, new liabilities are not being created. Today we're selling in Manaus without a check. New sales are not benefiting from the check. In other states, for example, such as CRA, there was a budget, the budget was used up. We have another 50 or 70 units to be sold this quarter. New sales also do not use the check. As we do not create new liabilities, solve the old backlog, and gross sales improve, we will reach a level in which transfers could be higher than production looking forward, given the organic growth in sales and the fact that this backlog is being decreased. Let's say that the backlog is over in the fourth quarter. As of the first quarter next year, we'll work strongly so that transfers are at least in line with the production.
When that happens and gross margin going up, naturally the organic cash generation will be very healthy. With regards to the registration of such transfer, which is the last stage of the process, we only have a postponement of this receipt that is in 60 days. We have BRL 200 million-some, that is a transient account. This volume will grow a bit more. It will certainly grow in the fourth quarter. It will become stable at some times at around BRL 300 million-BRL 350 million, which will be invested in savings accounts. That is a characteristic that happens with all companies of the same economic segment. We want to have a gross sales volume that allows me to transfer slightly more than I am producing. If that happens, we will have a cash generation dynamics much stronger than we had in the first nine months of the year.
Is that clear?
Yes, thank you. That's very good. Have a good day. You too.
The next question comes from Tainan Costa from UBS.
[Foreign language] .
Good morning. I would like to talk about Urba. It was positive, although it did not account for a high amount overall. If you could recap on the turnaround, what were the improvements and what should we expect on a recurring basis looking forward? I know you do not give guidance, but do you expect to maintain this level of net income or is there some volatility and what would drive it? Thank you.
Good morning, Tainan. Urba had, in fact, I would say that 2022 and 2023 were very poor years. The company grew too fast, also geographically, it grew too much and or too fast, and it was impacted by an inflation of 40%.
In case of Urba, the inflation for main inputs, in some cases, rose by 100%, and prices did not grow so quickly. 2021 and 2022 were very poor periods. We were more aggressive in buying land. We bought land with cash. It was a poor execution cycle. Starting 2024, we have a leaner company in fewer geographies and a more focused portfolio of products. Quarter on quarter, we started selling more, recovering prices and margins. This dynamic remained in the year 2025. Looking forward, Tynan, what we expect, although we do not give guidance for Urba, we expect Urba to be a company with organic growth, without any bumps, you know, a continuous growth, because it has a very high-quality land bank and we still see room for growth in gross margin. With time, the importance of Urba at MRV&Co.
tends to grow in coming years, but very prudently, with a lot of discipline. New land with a type of purchase without capital allocation. Urba has to be a cash generation company, an asset-light company, with G&A growing less than revenue. I would say that we have a very bright future ahead, but without this willingness to grow very quickly in a disorganized way, entering many markets, we will be disciplined and prudent, looking at operations, you know, observing the market, with asset-light portfolio transfer model. Urba is a company that will positively contribute to cash generation and to net income in the next quarters.
Okay, perfect. Menint, that is very clear.
Our next question comes from Marcelo Mota, from JP Morgan.
[Foreign language] .
Good morning.
[Foreign language] ?
I would like you to please comment the reduction of the locations to reduce the complexity of the operation and if this could bring a decrease in the gross margin. I understand that the pathway to improvement is favorable and clear, but anything could happen to any favorable wind to help in the margin. As of for Resia, could you give us some more color about these additional expenses that could come from the reorganization of the G&A? Just to know if anything could be significant in the third and fourth quarter, or fourth and first quarter. Thank you.
This is Fischer speaking. I'll answer the first one, and then Cacá will answer the second. Our plan to reduce locations remains. Each location, there's an independent region decision. Some of them we had a land bank purchase and will remain. In other locations, we were able to sell land.
Even in those locations we decided to leave, they have the same margin logic of MRV. This 35% that we mentioned, that could go up to 38% ex-interest. This is the rationale. We decided to leave some locations because in our point of view, the volume did not support a production line in the way we want to work nowadays. Margins follow MRV's standard. That is important to highlight. There are several tailwinds. What we see currently does not consider some important points. I said previously about the review in the laws that has happened. That is very important. Those present at the MRV Day saw us focused on initiatives that will provide gains that were not included in the system. There are several projects happening inside the company, especially regarding products that were not included in the system.
They will happen slowly or gradually during 2026, 2027, and 2028 fully. They are not an input; they haven't been entered in the system yet. When I see Minha Casa Minha Vida, the efforts of all the states to improve the program, changes in laws that I mentioned, in addition to fewer locations that MRV will be present, when I stack all that, we have a huge optimism from customers and will, in addition to all the efficiency in our operation that we have currently. The movement to reduce locations is in line with our plan, but that doesn't mean we'll have a loss in margins. Now let me transfer to Cacá to talk about Resia. As the layoff will happen in the U.S. market, it's a lot simpler to do that there than here, so the impacts are low.
We'll see a reduction in G&A in the future with no impact in increases in the fourth quarter or first quarter of 2026 as a result of that.
Okay, that's clear. Thank you.
Our next question comes from Rafael Rehder from Safra.
[Foreign language].
Good morning. I have two points here I would like to address. First, regarding the changes in announced this week, but for the program, especially in the increase in the cap from BRL 270,000. I would like to understand how much you were reaching the previous caps and what would be the additional benefit for you. Would you increase prices or bring new customers and in change the sales over supply? In the beginning of the year, you had a more conservative scenario, but we have a more beneficial scenario for costs, lower dollar exchange rates.
Do you expect any changes for next year?
Rafael, this is Fischer speaking. Yes, this is a movement that's being done slowly. The changes in the cap of Minha Casa Minha Vida did not come for all levels. The levels that apply, we have an exposure of 40% of our inventory, so it's significant, but it doesn't include all of it. Within that world of 40% of our inventory, a good portion is already close to cap or higher than cap in level two or bracket two. It adds value. In those locations, we're closing, working close to the gap, the cap, so we'll gain an adjustment in price to be able to adapt to the new pricing reality in that location. In those that we haven't reached yet, we'll work with a smaller portfolio to reduce pro soluto.
There will be a mix of both things, but that only includes part of our inventory units. What we expect is in the beginning of 2026, we'll be able to adjust other brackets in addition to the adjustments in income levels. It's important because many of our customers are experiencing that reality. That's an important thing that will be unlocked, and we'll be able to make it happen in the beginning of next year. Regarding gross margin and inflation, yes, as we mentioned in the material, the behavior is different from what we expected. That comes not only from a lower inflation pressure from materials, as well as from a gain in efficiency from MRV.
It's not only the inflation in the economy, but there are also in-house efficiency gains, which ends up reflecting on what we call the unit disbursement, what we spend in each unit in terms of construction costs, production costs. There is a pressure from labor costs that will continue to happen, but it is offset by a negotiation in the price of materials. The prospect for inflation is lower, as we see a lower inflation expectation for 2026, 2027, and 2028. We look at that with a good security safety margin. As I said previously in my answer to Motta, several of our processes are going into production now, and they will bring additional productivity gains and cost reduction. That will have an even more positive impact.
Thank you. Our next question comes from Piero Trotta from Citi.
[Foreign language] .
Good morning, team.
Thank you for the call. I have two questions. First, how do you see the strategy from price transfers or pass-through? Should it be slightly above inflation or in line since you have a cost efficiency? So maybe the need to pass-through to prices will not be the same as in the past. And also, if it is possible to maintain that above inflation. The second question is, what will be the cash disbursement to buy land in 2026, both new land and land that was purchased in the past, but still are using some cash? If you could give us some figures on that. Thank you.
Good morning, Piero. This is Rafael Menin speaking. Prices pass-through. The conditions for Minha Casa Minha Vida are very good. We have state programs that are helpful. Some states are thinking of implementing subsidies.
At the local level, a lot of good things are happening, changes in master plans. The dynamics of Minha Casa Minha Vida is very good, and there is room for it to improve even further. It's clearly a market given the huge deficit in housing. One million families are being created per year. As you allow these families to buy a house, there's a huge dynamics for this market. We are certain that this dynamic will prevail and become stronger with every adjustment that's made at the federal level, supported by states and local adjustments. Having said all that, we've been able to pass through prices slightly above inflation rates, as we saw this year, and we believe we'll still be able to have a similar dynamic starting next year.
In the other end, costs, we see that land purchased in the last two years was cheaper than land purchased in previous cycles. We also see efficiency gains in production, efficiency gains in the design. We've been able to build more compact and more efficient apartments. Of course, it takes us some time to put that in the production line. Looking at the current leverage that will become the future of the company, the price dynamics moves towards a positive direction and costs, and by that I mean construction costs and land costs, we see a favorable path as well. The combination of these two factors gives us a scenario in which there will be room for a gross margin higher than the current one that is at 35%. That includes interest, ex-interest, that is a margin slightly above 38%.
It is possible to reach a gross margin ex-interest above 38%. We're working for that, and we're confident that that will happen in the coming quarters. Regarding land, what will happen with MRV, given that the land purchased recently, 90% of them were with financial swaps or physical swaps, only mostly financial deals. What we'll see in the next two or three years is that the volume of disbursement with land will be proportionally lower than the launched PSV. We have an MRV slide that's also in our presentation, and like a water deposit in which we have an upper part smaller, bigger than the output rate. The goal is to get this lower than BRL 1 billion. It won't happen in one year, but during 2024 and 2028, 2029, we have BRL 1 billion of capital allocated less in land. Is that clear? Very clear.
Thank you. Our next question comes from Elvis Credendio from Itaú BBA. Good morning, Rafa. Everyone, Cacá, Eduardo. Luggo has projects with a PSV of BRL 200 million. How do you expect to monetize and the time to sell these assets? Could we count on that for 2026? The second question is about cash generation. It is more of a conceptual question. If you could detail the methodology you use to calculate cash generation in the guidance and the guidance that you make to understand the net debt and understand how this methodology would capture that, does that help the company to reach its cash generation guidance? That is it. Thank you.
Hi, Elvis, this is Cacá speaking. We actually have these three properties from Luggo ready.
In addition, there are five other projects of Luggo that could start construction since we have the land, but we're not starting any construction at Luggo until we address these three projects that are finished. We are now operating like we are doing in Resia. The projects are finished, and now they are being rented. We understand there is a higher sales appeal once they are rented. The rental performance is great, and the NOI is doing very well also. Throughout next year, we'll probably have some transaction in terms of sale of those properties. If we create a fund or sell to one player, we still don't—we haven't chosen any options so far. As for cash generation, what we do is, in terms of adjustment, we try to place it as close as possible to Brazil's operation.
We exclude interest that we—the funds we raise to pay MRV U.S., and we also include with and without the effect of this portfolio transfer, and we add back again the variation of the transitory account. Since cash only transfers at the moment of registration, and in the past, it used to credit our account when the transfer was made, we also have to add that variable to be comparable to previous performance. MRV U.S., we have the transitory account, and we are publishing with and without assignment of receivables.
Thank you, Cacá. You have a good day.
The next question comes from Igor Machado from Goldman Sachs.
Bom dia, pessoal.
Good morning. Thank you for the questions. I would like to understand more about the gross revenue and appropriated revenue or allocated revenue.
What is the breakdown of these revenues in the annual periods of production of the company? You've mentioned in one and a half years you would achieve the reported margin, which is the current level of margins. I would like to understand how this progression—how do you see this production between the reported margin and the ref margin, whether these old units built continue to impact it?
Okay, Ivo, this is Ricardo speaking. First, the unearned revenue and unearned margin. What we have at unearned margin is 33% compared to the reported one of 30.7%. In one and a half years, we'll see the margin from new sales that are happening now, the booked margin converging for new sales that we see, which is currently at 35%. Regarding the margins from previous construction periods, we had a poor period in 2021 and 2022. 2021 is behind.
2022 has a small part left that will end in the fourth quarter. We have 2023, 2024, and 2025. 2023, we had a margin of 26%. Last year, 32%. This year, 35%. If you add these three years, it is close to 31%, which we are reporting now. Next year, we will end the period of 2023. We include 2024 and 2025. That will support the increase in margin that we will see from now on in 2026.
Perfect. Thank you.
The next question comes from André Baia from Construtora Estrela da Manhã.
[Foreign language].
Good morning, everyone. I felt that turnaround of MRV, which is great. As a shareholder, I am very excited to see how much you are learning from this difficult moment, and you certainly come out stronger in some years.
My question is, you've noticed a huge new company operating in five or six companies, each property with a stronger PSV of BRL 1 billion and no competitor is doing dominating that kind of property; maybe a differential for MRV. Other companies operating, the projects operating well with good margins. I would like a briefing on this town, Sete Lagoas. Thank you.
This is Fischer talking. Good morning, André. Sete Lagoas City is an important strategy. We have launched São José dos Campos more recently, last month. We did very well at good margins. The advantage of Sete Lagoas projects is that we provide a good sequence of launches, always with the same brokers, engineers. There is a production line that is extended for several years in that location, with gains of productivity and scale, which is very important for us.
That's one part of the strategy of MRV: to generate a mix. Usually, the town of Sete Lagoas has a longer approval period. We are at the seventh project, but they have been all very successful. This linear aspect is very important in the cities we operate. This has been a source of many success cases. Thank you for your question. [Foreign language] . This ends the Q&A session. [Foreign language] , for our final remarks, I would like to hand the floor over to Mr. Eduardo Fischer. [Foreign language] . Just a final comment. Something we did not mention in the call, but it is very strong at the company. When we look at the company today, the company has clearly evolved quarter after quarter. We have been strong. We have made great launches, reducing expenses.
On the operational front, we've been able to deliver a very good development quarter on quarter. Looking at the market in general, there is a very positive scenario, not only because of the almost endless demand we have, but also several incentives that allow us to capture on that demand. Looking at the operation of the company and the upside, we have MRV has 270 construction sites in progress, a very robust engineering team that is producing the scale for more than a decade, which gives us great operational security and confidence. Revenue is going hand in hand with the volume of operations. We have an engineering team that is robust, a talented team that is able to deliver on that operation at a very high efficiency rate. We have a clear upside for MRV.
On the other side, an execution capacity that's in-house, which is a unique case in our industry. We can deliver. When we look at 2026 and 2027, we have everything in-house to be able to deliver on those promises for 2026. Things are in-house, happening at a scale we need for a long time now. I am very confident that MRV will generate this upside, and this will happen quickly. The results are coming, and we see that we will have an opportunity to deliver an even better and stronger company in 2026. Thank you again for being present, and we will see you in the next quarter. The conference call of MRV has ended. We thank you all for participating and have a good day.