Ladies and gentlemen, good morning. Thank you for holding, and welcome to MRV's earnings conference call for the first quarter of 2026. Today, we have with us 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 all participants will be listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question and answer session when further instructions will be given. To open the Q1 2026 earnings call, I would like to hand it over to Mr. Rafael Menin, the CEO of MRV.
Good morning, everyone. Thank you for attending one more earnings conference call of MRV. I would like to start by saying that I'm very positive and certain that MRV holds a differentiated position in this market context.
We had acquired land bank that's highly efficient, that's been launched in quarters, and as well as an inventory of units built and not sold. Our portfolio is in high quality. Our production team remains more and more productive every quarter, delivering costs below inflation. In the latest years, we've made an important catch-up regarding inflation, transferring prices above INCC inflation rate consistently. This logic is good because the market remains in high demand, and MRV is a very quality brand with high demand. Our production flow ensures competitiveness and a production differentiation. This combination of factors provides us protection in the short run, while it supports an operation that's more and more profitable.
For 2026, our main commercial goal is to continue to increase the sales volumes, and therefore more units will be transferred, either accompanying or exceeding the amount of units produced. This dynamics should support the growth of net revenue quarter-on-quarter. From the margin point of view, we remain confident in our growth strategy. We closed last year with a gross margin of new sales close to 34%, and this margin will continue to grow every quarter. As new vintages become significant in earnings and the old vintages leave the basis, the accounting margin continues to improve with growing revenue, and the net profit will also improve every quarter. Cash generation will remain in the same trend. With better profitability, sales and transfers growing will present a cash generation that will be stronger and stronger. Now talking about Resia. The deleverage plan keeps advancing.
In the first quarter, we announced important sales in our portfolio, including Resia Tributary and other plots of land, generating cash of BRL 360 million. We continue to be focused on transforming assets into cash, decreasing leverage and simplifying operations. Our strategic adjustments made in recent years that continue in place are putting the company in the best, in the path for the best MRV in history. I take this opportunity to thank our team all over the country that plays a brilliant role in this journey. I turn the floor over to Cacá.
Good morning, everyone. Thank you, Rafa. I'll start by talking a bit more about MRV real estate development. Our operation continues to evolve, the data from the first quarter shows this. The main indicators improved when compared to a year ago.
This is the fairest comparison, given that the first quarter has fewer working days due to summer holidays and Carnival. We had BRL 2.5 billion in net sales, 10.5% below Q4 2025 and 14% above Q1 2025. BRL 2.9 billion in launches in the quarter, 7.5 Q4 2025 and in line with Q1 2025. We produced 9,747 units, 0.9% Q4 2025, 3% higher than the same period of the previous year. Transfer volumes and net sales in the quarter would have been higher if it weren't for the strong concentration of sales in March. This meant we didn't have enough time to process transfers and consequently account for sales within the quarter.
This high volume of sales not yet transferred created a significant backlog of units to be transferred, ensuring a strong start to the second quarter. Moving on to the financial indicators. Net operating revenue closed Q1 2026 at BRL 2.6 billion, a growth of 17.6% compared to Q1 2025, and a decrease of 8.2% compared to Q4 2025. Gross margin, 31%, stable compared to Q4 2025 and 1.4 percentage points above Q1 2025. Given the current geopolitical scenario, we are conservative and have revised upwards the projected inflation in construction budgets. This adjustment prevented margin growth in this quarter. Starting in Q2 2026, we'll see the resumption of the margin expensive trajectory that tends to converge to new sales margins. Sales expenses for Q1 2026 totaled BRL 245 million, impacted by significant marketing campaign in the period.
Starting in Q2 2026, these expenses will return to their usual level. Administrative expenses rose less than inflation, ensuring decrease against revenue. EBITDA for Q1 2026 were first BRL 410.6 million, a growth of 38.5% compared to Q1 2025. Adjusted net income continued to improve year-over-year. In Q1 2026, we reached BRL 133 million. Moving on to balance sheet indicators, I highlight the adjusted cash generation of BRL 117 million, a growth of 7% compared to Q4 2025, reversing cash burn in Q1 2025. Net debt annualized at EBITDA of Brazil operations fell to 1.3 times, a reduction of 26% compared to 1.77 times in Q1 2025 and almost half compared to Q1 2024. Speaking about our subsidiaries. At Urba, Q1 2026 seasonal effects negatively affected the subsidiaries results.
Net revenue was BRL 56 million and gross margin of 47.3%, an increase of 3.3 percentage points compared to Q1 2025. Expected result for the year remains unchanged, with a positive contribution to cash generation and net income. Luggo currently has three completed projects, with two stabilized and 1 in the final stabilization phase. They will be ready for sale soon. Reinforcing operational discipline will not start new projects unless they have been sold beforehand. Now, speaking of the U.S. subsidiary. Brazil continues to implement its deleveraging plan. Cash generation was $69 million in the quarter, driven by asset sales. In Q1 2026, we sold T ributary in Georgia for $73.3 million and two additional plots of land for $18.3 million, totaling $91.5 million in assets sold in the quarter, equivalent to BRL 480 million.
We have accumulated sales up to now of $241 million of assets versus BRL 800 million planned until the end of 2026. Regarding completed projects, occupancy continues to progress. In April, we have Rayzor Ranch 93%, Memorial 75%, Ten Oaks 71%, and Golden Gate 65%. This development supports our sales plans for the coming periods. We'll now start the Q&A session.
If you would like to ask a question, please click on Raise Hand and then ask your question. If your question is answered, you can leave the queue by clicking on Lower Hand. The first question is from Bradesco BBI.
Good morning, everyone. Thank you for the questions. I have two questions. First, if you could talk about the schedule for the sales and transfers in terms of cash generation, that would be good.
Also sales expenses that are higher, I would like to understand how that would be in the next quarter, and if we can see it lowering throughout the year.
Good morning, Herman. This is Rafael speaking. Regarding sales and transfers, we disclosed in April. We equalized sales and transfers as we did in the fourth quarter. We delivered around 10 units built and 10,000 transfers. We started positively in this. We are positive and confident that in the second quarter, transfers will keep in line with construction and units built or maybe higher. The demand is high. The program is very positive. We are very confident that this dynamic will be very different in 2026 compared to 2025.
We are confident that sales and transfers will keep hand in hand from now on and possibly catching up, those units that were left behind in the first quarter. Regarding SG&A, sales were slightly above the fourth quarter, more in line with the first quarter of last year. We're making a strong branding campaign in the first Q, and we repeated that. Looking forward, both sales and G&A expenses will decrease regarding net revenue. In addition to SG&A expenses, that will be diluted year-over-year and therefore will be a leverage to improve profitability and the net income of the company.
Okay. That's very clear. Thank you.
The next question comes from Igor Machado from Goldman Sachs.
Good morning, everyone. Thank you for the questions. We have two.
If you could give us some more detail about inflation and tell us how much I know you cannot talk about specific figures, but how much you increase your budget for inflation. Did you stress test any stress scenarios or any impact that it could have on the gross margin? Anything you could share with us would be useful. My second question is about the latest changes of Minha Casa Minha Vida housing program. Has there been changes in prices or price increases, and how much you expect to increase still?
Good morning, Igor. Well, regarding inflation, yes, we can talk about it. We have made provisions of 2% more for inflation than expected. Two extra percentage points for inflation than budgeted. Yes, we did a stress test for several scenarios, length of war.
We are talking to the supply chain vendors and to understand the dynamics from now on. Most importantly, we've been In the last three years, we've been managing to have costs advancing significantly below inflation. In the first quarter, we saw the same thing happening. Increases in our supply chain so far were surprisingly lower than we expected. We are very confident that inflation, projected for the year INCC around 6%. We now estimate INCC, National Construction Index, inflation rate of 8%, but our cost will be much lower for 2026 than the actual INCC. This dynamic was true for 2024, 2025, and will be for 2026 as well. Because of good negotiations but majorly due to productivity gains we've been able to implement in construction sites.
Regarding the accounting margin, we are very confident that as of the second quarter it will take a positive trend. In the first quarter, it was stable because we made a conservative adjustment to budget. You hold the recovery of margins, from now on it will again be positive. When you look at the margin over new sales, that's for each vintage, the margin of the first quarter was better than the fourth quarter of last year. April is better than March. We are absolutely sure that the gross margin of new sales dynamics, the gross accounting margin despite this new variable, we are very confident that the margin will continue in an upward trend. Another important aspect, let's look at the glass half empty, half full.
Half empty is that in the last two years, we sold less than we built. That delayed cash generation. Looking at the glass half full, we have many units built and not sold, and right now they work as a hedge for the company because prices are going up, the market is performing well, in high demand. The adjustments made to Minha Casa Minha Vida housing program have allowed the company to benefit in many ways with VSO or sales over supply increasing, distrato sales. Prices are increasing, sales over supply are increasing, and distrato is decreasing. We continue to see our actual inflation rates below INCC rate. That makes us believe that what we plan in the beginning of the year is preserved, and we'll be able to deliver on financial indicators and operational indicators, and we see them healthier.
Okay. That's very clear.
Thank you.
You are welcome. The next question comes from Andre Mazini from Citi.
Good morning, Rafa, Fischer and Cacá. The first question is a follow-up, and the second is a different topic. Given this more uncertain geopolitical scenario and new inflation rates, what is changing in your sales strategy to preserve the spread between price adjustments and construction inflation? Considering that you want to transfer above INCC, do you have any goals regarding that? The second question is, you mentioned about marketing expenses in the first quarter. It was a significant campaign. Has there been any structural change in the cost of acquisition of clients? What should we consider the recurring sales expenses from now on?
Good morning, Andre. Regarding sales, what we did in the first four months of the year was, sales prices are above cost.
In terms of cost increases, as I said in the previous questions, they were lower than expected. During COVID-19, we faced a very tough period, and that was a tough lesson to learn. Now we are assured that we are paying absolute attention and putting lenses on prices. You know, we keep track of that on a daily basis to avoid any surprises. The market is very healthy now. Our housing program is very healthy. We are working on the strategy to work with some specific targets in areas where we are advanced. The sales dynamics is very strong, very high margins. We have some towns where we operate in with margins close to 40%, and we'll continue to work with this performance in other areas as well.
The cost of land, cost of product portfolio, cost of execution, and sales costs are all favorable for us. We are very cautious and prudent in the first quarter, but we'll continue to execute with absolute certainty that our operation will be healthier and healthier, both in terms of gross accounting margin as well as gross margin for new sales. The performance says that the results will be more and more efficient. As for marketing campaign, we did the same we did last year, repeated it this year. It's an important branding campaign, especially when you talk about the main purchase for a family, which is the home. Our brand is by far the top call, it's the brand that people recall with the greatest recall. That's very important for our strategy.
Answering your question, look, as SG&A on net revenue and sales, we are certain that it will be lower than it was in 2025, which was lower than 2024.
Thank you. Great.
It's my pleasure, Andre.
The next question is from Luiz Ward, from Santander.
Good morning. I would like to ask a follow-up on the previous question. About the inventory of finished units or close to be finished, do you believe that there is a capacity to transfer prices in this inventory of units? Is it a bit lower? Anything different from the units that are in the beginning of construction? Maybe you won't be transfer prices so much for this, for those units. The second question is about the indebtedness of the population.
You're saying that prices are being transferred with no problems, you were transferring prices nevertheless, the indebtedness of the population.
This is Fischer speaking. The inventory of finished units is very low. What we built and transferred, as Rafael mentioned at the beginning, becomes a protection buffer for us. The advantage is that in this vintage that's ready to be almost finished, we're able to accelerate the margin because on average, the demand remains the same. Our product won't be highly impacted by this larger inflation curve. We are exploring this commercially, saying that there's no better moment to buy a home than now, because the trend is for it to be more expensive in the future, and the market is reacting positively to that.
As for the indebtedness of the population, that is a source of concern, we're trying to balance the variables with demand. There's a very important tool, which is correction or adjustment of Minha Casa Minha Vida. During 2025, there were important adjustments to bracket levels. Regardless of the indebtedness of the population, the purchasing power remains there, which is very important for our pricing strategy. Yes, we are monitoring that, especially regarding our portfolio. We've made efforts to decrease the portfolio of after key delivery, where delinquency is higher. We've been able to balance that in a healthy way. There is a variable that's important because the program is supporting us. With the current inventory, we have the opportunity to have higher margins with low inflation risk.
On the other hand, we have high demand, a solid program that allows us to have good prices without being negatively impacted by the indebtedness of the population so much. Is that clear?
Yes, very clear. Thank you.
The next question comes from Tainan Costa from UBS.
Good morning, Fischer, Menin, and Cacá. I would like to go to the U.S. and hear about Brazil. The rental base is better and our projects are growing well quarter on quarter. What were the sales efforts in this quarter? Did you need to give some discounts in rental prices for those levels or did everything happen as expected? The second question is the sales timeline for those projects, the legacy projects.
What you projected in when you announced the sales of assets, the guidance of $800 million, is that in line with expectations? Is the scenario better or worse? In general, what is the sales scenario for those projects?
G ood morning, Luiz. I'm sorry. Good morning, Tainan. The U.S. market has had significant differences from city to city, regions within the same city, and that is related to the supply created in the last four years and not so much with demand. Demand remains very strong. Florida, Texas, and Georgia have strong markets. Migration continues to impact those markets. What changes is the supply of products built between 2020 and 2023, 2024, which began to be delivered last year. This year they continue. Prices are lower than what we would like, especially for two products we have in Texas.
Rentals are fine. In Miami, looking at the rental dynamics, we are confident that at the end of the third quarter, all products will be stabilized. Rayzor Ranch, for example, and Texas is an area with a high competition. We've been a bit more aggressive in terms of rental prices there. The product will be stabilized in May or beginning of June. Houston, Ten Oaks, and Memorial in Atlanta. In Atlanta, it should become stable in the third quarter. In Miami, the project should be stable in August. The dynamics of speed or pace of rentals is good. Now with the summer coming, people move from town to town. It's a new dynamic that's generated, and we're confident. Rental prices are lower than we expected.
The four products or the five products, actually, in a few months, they will be ready for sales. Some are advancing faster than others. Naturally, if we have to choose prices, the faster we want to sell, we may sell at lower prices because although the products are stable. It takes a while to stabilize the NOI for the product. We are discussing this trade-off of speed which would bring high cash input. The sales price is very high for those four projects. That would completely change the cash dynamics of the company, but we would leave some money on the table. We are trying to ascertain the best price for the project.
Answering your question, yes, the rental dynamic has improved, but the prices are lower than what we thought they would be one year ago. With the exception of Miami, which is at par. Is my answer clear?
Yes, very clear. Thank you.
The next question is from João Pedro Rodrigues f rom XP.
Good morning. Thank you for the question. I have one question. Someone has talked about the indebtedness of the families. We've seen a report from MRV talking about cancellations and justifying that increase regarding some regional aspects of My House, My Life, Minha Casa, Minha Vida, in cities. My question is, do you see any difficulties with the regional checks or incentives? Do you believe that that would pose a problem during the year that would harm your cash generation?
This is Fischer speaking. I talked earlier about indebtedness.
When you look at the regional checks dynamics, it's quite positive, especially in terms of addressing the indebtedness of families. When you remove the pressure on the down payment from families with these regional checks, that's good because the bank knows that they would have an additional subsidy, and that encourages credit facilities. Since these programs are very recent, states are still learning how to operate with the budget, and there have been some ruptures in some states, especially in the Amazon state, Amazonas, which created a problem for MRV and their competitors. That was solved. In the States, I continue to see a strong wish to make these programs work because the social impact is very important. As the state governments learn to operate with those checks, these problems tend to end.
In states that have operated with regional checks for more time, we don't see any bottlenecks. It's a constant flow of credit. We believe that the regional checks will remain in place, and they are very positive, especially in a scenario where families are more indebted. That's very positive for us. Okay, thank you. Just complementing on Fischer, there were two states that are more complicated in which we don't use the checks anymore. We decided to sell the units without the help of the check in these two states. The other eight and nine states that have these checks, the dynamic is positive. It's working well, mature. They have funds. They help to sell directly, and they help also customers that have less funds to buy the property.
In order to ask questions, please click on Raise Hand. Once again, if you have a question, please click on Raise Hand. This ends the Q&A session. For the final remarks, I would like to turn the floor over to Mr. Eduardo Fischer, CEO of MRV.
Well, two important points. In our MRV Day in March, I talked about the operations of MRV and the mood. The operations continue to improve. March and April were very good months for us, and we see May in the same path, which reinforces our optimism in the sense that the operations are mature and becoming better and better. The initiatives of simplification of a leaner portfolio. As this continues to operate, to become operational, we only have positive trends.
We are very confident that what we've done in the last two or three years will give good results and continue to do so. The operations will continue to evolve every month, every quarter. The second point that we've had strong discussions about inflation. We made a point to make a conservative move ahead of the curve, so that inflation can be under control within the scenarios we envisage for 2026 and 2027. For reference purposes, we participate every week in a meeting to discuss what was renegotiated during that week, the impact of inflation for the several vintages and executions and launches that are being completed, to be able to respond promptly to that. We take that very seriously, we are very conservative.
Just for reference purposes, the impact so far for the year is about BRL 900 / unit in terms of cost, which is very low and covered within the scenarios we talked about. We've been conservative and taking that seriously, moving ahead of the inflation curve as we see it. I'm very confident that we are taking a conservative position about that and won't have surprises in the future. On the contrary, if the scenario does not worsen, we can even have a gain. Thank you very much for attending the call, and have a good day.
The conference call of MRV has ended. Thank you all for attending, and have a good day.