Good afternoon, ladies and gentlemen, and welcome to Plano & Plano fourth quarter 2023 earnings video conference. This video conference is being recorded and can be replayed at the company's IR website. The slide deck is also available to be downloaded. We would like to inform you that all participants will be in a listen-only mode during the presentation, and later, we will hold a question and answer session when more instructions will be provided. Before proceeding, I would like to mention that statements that may be made during this conference about the business prospects, forecasts, and operating and financial targets are beliefs and assumptions of the management of the company, as well as information currently available to Plano & Plano.
Forward-looking statements are no guarantee of performance as they involve risks, uncertainties, and assumptions, and as they refer to future events, and therefore depend on circumstances that may or may not come to pass. Investors, analysts should understand that events dependent on the macroeconomic environment, the sector, and other factors may impact future results of Plano & Plano, and cause them to be materially different from those contained in the forward-looking statements. With us today, we have Rodrigo von Uhlendorff, our CEO, Rodrigo Luna, our VP, and João Hopp, our CFO and IRO. I would now like to turn the floor over to Mr. Rodrigo Luna, our VP, who will start the presentation. Mr. Luna, please.
Thank you. Good afternoon, everyone. Thank you very much for joining our video conference in the fourth quarter 2023 to discuss the fourth quarter results of 2023.
In the past years, Plano & Plano has been delivering sustainable growth, and we have been improving our performance on many fronts, making the company more resilient and making the company able to seize opportunities in the real estate market in Brazil. The company reached a milestone of BRL 3 billion in launches and sales in 2023. With that, we have achieved our highest result in our history. These figures are the result of continuous improvement on all of our work fronts. We invest in the improvement of our processes, governance, technology, and people, and we invest in that constantly. We are constantly attentive to improve the client experience with the company, and our history shows that we have continuously improved. We have ended 2023 with our company being the best-assessed company in the Reclame AQUI, the customer protection and complaint agency.
That among the five main real estate developers that are publicly traded and focused on the low income segment. With these milestones, we can see that we are well accepted in the metropolitan region of São Paulo, the main market in Brazil. This is the result of a strict and dedicated work. Looking at the future, we are optimistic as we have built a solid foundation to continue to grow profitably. Our participation in the Pode Entrar program in the city of São Paulo offers us a unique opportunity to contribute to the transformation of the local community in a positive way. At the same time, we strengthen the company's reputation as an agent committed to social development. Plano & Plano is the company that has so far had the most contracted units, which shows how efficient we are in the low income segment.
We're constantly attentive to changes in the real estate market that could have an impact for the company. We understand how important it is to adapt strategies to face challenges and to seize new opportunities. We believe that resilience and risk mitigation are key in our lasting success, and this is the mindset we have to face uncertainties. We have a positive perspective of the future. We're confident that we can overcome obstacles and that we can operate in a dynamic environment. Our main commitment continues to be to maximize results and deliver value to shareholders, and to make sure that our clients and customers are satisfied. Plano & Plano continues to offer adequate and worthy living conditions for a growing number of families, helping to address the deficit we have in residence in our society.
I will now turn the call over to João Hopp, our CFO, who will talk about the operating and financial highlights.
Thank you, Rodrigo, and good afternoon, everyone. The total net sales, 100% higher in the fourth quarter 2023 amounted to BRL 1.33 billion, 152% higher year-on-year. In the fourth quarter of 2022, we had BRL 519 million, and it's also 105% higher than BRL 638 million we had in the third quarter of 2023. In the full year of 2023, net sales amounted to BRL 3.1 billion, and 81.7% year-on-year. This result sets a new record both in the quarter and in a year for Plano & Plano.
Net sales 100% focusing only on the private market, that is excluding the Pode Entrar program sales that were contracted in the fourth quarter 2023 amounted to BRL 616 million, 18.7% higher than the BRL 515 million recorded in the fourth quarter 2022, and 3.5% lower than the BRL 638 million we had in the third quarter 2023. In the full year 2023, net sales amounted to BRL 2.3 billion, which is 40.8% higher year-on-year. With these results, even excluding the Pode Entrar program sales, the company sets a new record both in a quarter and in a year. In the fourth quarter, we launched 12 new projects totaling a PSV of 100%, including physical swaps of BRL 1.7 billion, which is 136% higher in comparison to the BRL 528 million launched in the fourth quarter in the previous year.
Plano & Plano had BRL 3 billion and BRL 344 million in PSV, an 85.2% growth year-on-year. The company had never surpassed the BRL 3 billion milestone in PSV, and we have set a new target in that KPI as well. In the fourth quarter, the company launched eight new projects, excluding the Pode Entrar program, totaling a PSV of 100%, including physical swaps of BRL 1 billion, which accounts for a 39.7% increase in comparison to BRL 720 million launched in the fourth quarter of the previous year. Plano & Plano launched BRL 2 billion 652 million in PSV, reaching a growth of 46.9% year-on-year. Even without the private market sales, 2023 accounted for the best year in the company's history. At the close of December 2023, our SOS indicator was 49.5%. There was a drop of 3.4% in comparison to the previous quarter.
This change is due to the five projects that were launched in the month of December, totaling a PSV of BRL 742 million. This value adds added to the base of the inventory available to the sales. Even with this effect, our SOS at the close of the year was one that showed a 6 percentage points improvement year-on-year. Our SOS in the Pode Entrar program was 55.8%. We remind you that we have all of the units from the Pode Entrar program sold with the signature of the contract that took place on 12/26/2023. Our inventory over sales proportion has been consistent in the past quarters. Every quarter, this indicator has been improving, allowing the sales teams to concentrate on new launches, resulting in the increase of our SOS in launches. It's a virtuous cycle.
The net revenue of the company was BRL 640 million in the fourth quarter 2023, 46.6% higher than the BRL 436 million recorded in the fourth quarter 2022. When compared to the revenue of BRL 555 million in the third quarter 2023, it was a 14.9% increase. In the full year, there was a 39% increase, totaling BRL 2.1 billion. Our methodology follows the percentage of completion reference. In the fourth quarter 2023, the adjusted gross profit was at BRL 219 million, and the gross margin in the private market, ex or former Pode Entrar, reached a 35.2% reference with an increase of 1.2 percentage points quarter-on-quarter, or rather year-on-year, pardon me. No, quarter-on-quarter. I correct myself. In this context, the company adjusted its gross margin from 34% - 34.2%.
With this additional information, the adjusted gross margin, referring to the Pode Entrar program in the fourth quarter 2023, was 30.1%. The REF margin, former Pode Entrar, maintained the reference from the previous figure, which was 40.5%. When we look at sales expenses, the fourth quarter had an increase quarter-on-quarter from 10.5% - 10.7%. That happened due to a non-recurring event. During the negotiation processes and the acquisition of new land bank, there could be new payments. If the contract is canceled, then they're going to be seen as expenses on the date of the cancellation. In the fourth quarter 2023, there were some spot contract cancellations or terminations, and that amounted in BRL 3.1 million in non-recurring expenses. Without that effect, or excluding that effect, the number is 10.3%, which is an improvement compared to the previous figures.
When we look at the G&A expenses, there was a maintenance of the same value from the third quarter to the fourth quarter 2023 at 5.2%. The company continues to show solid and sustainable growth in the course of the years. With expectation to grow into the mid-end sector, we have hired new teams specialized in the development and implementation of such projects. Net margin in 2023 was 13%, a 4 percentage point increase year-on-year. When we look at the net income in the year, it was BRL 268.6 million and at a very substantial increase of 100.9% year-on-year. That is a record we have in net profit and net income. When we analyze the fourth quarter 2023, the net profit was BRL 83.1 million. That is a 43.8% increase year-on-year.
In 2023, the company's EBITDA, the adjusted EBITDA, was BRL 370.6 million with a 17.9% margin. These numbers show an increase of 65.8% year-on-year and a 2.9 percentage points improvement year-on-year, comparing the EBITDA and the EBITDA margin, respectively. Company cash was BRL 157 million in the fourth quarter. In the full year, the company had BRL 263 million. That's a new record set by the company as well, with the substantial increase of BRL 10 million year-on-year. That is due to the increase in the SOS delivered in the year, coupled with the improvement in our performance and construction works. Also, the Pode Entrar contract was signed on December 26, and the first payment that amounted to 15% of the whole value of the agreement, and it was BRL 103 million, was paid to the company on December 29.
At the end of 2023, the gross debt was BRL 187 million. With cash and cash equivalents at BRL 425 million, the net debt was reverted to a net cash of BRL 38 million. The net debt over equity is at -6.1%, 53.3 percentage points lower than the 47.1% at the end of 2022. That's the end of the presentation, and we are available to answer any questions you may have.
We'll now start the Q&A session for investors and analysts. Should you wish to ask any question, please raise your hand. There is an icon at the bottom of the screen. If your question's been answered, then you can leave the queue by clicking on the icon lower hand. Please bear with us while we collect the questions. First question, Elvis Credendio. [Non-English content]
Hello, everyone. Two questions. First one about the gross margin.
It's not yet back to the levels of the first quarter. Also looking at the REF in the market segment. You're still working on some projects, right? How much of the sales were recategorized and should any more be recategorized into Casa Paulista? Pode Entrar, my next question is about that. You talked about the hired units, and I wanted to understand how the construction works are expected to perform during the year. Just try and calculate what the impact on the balance sheet would be. Also if you have any further updates on the program.
Thank you, Elvis. This is João. As for the gross margin, we had an increase quarter-on-quarter when we look at the fourth quarter compared to the third. The third quarter had a one-off effect, which was sales in the Casa Paulista program.
We had over 1,000 units sold in that quarter, and then that figure dropped in the fourth quarter. So there were five fewer units sold in the fourth quarter comparing to when you look at Casa Paulista. This is why the gross margin rises in the fourth quarter. When we look at our future perspectives, we see the expectation of growth in SOS more than in margins. Of course, we want to increase the gross margin, but we know that it's got a healthy level, being at 35%- 36%, which is what we hope to have an adjusted gross margin, and we'll try and improve our SOS. As for Pode Entrar, the construction works timeline, we have some of that cleared or already handed.
At the moment, we signed the contract in December, so the construction work started in January, and we expect that we should have about 50% of the POC of the Pode Entrar, and then about 35% in 2025. New hires, we talked about this, or we published that. We have a BRL 372 million project in PSV to be approved by the municipality of São Paulo, and we just need to wait on the municipality. We have been very conservative in saying that we are not counting on that PSV for the growth and development in the year. Of course, it is an option value for this year. It is welcome if it happens. But we do not have any concrete expectation for new hires in the Pode Entrar for this year. Thank you.
Thank you. Herman Lee from Bradesco BBI. You may unmute yourself, sir.
Hello, everyone.
Thank you for taking our question. In the quarter, you had very strong cash management and net cash, so you could increase dividend payout to our mind. What is your expectation?
Thank you, Herman. In January, we declared dividends for the year of 2023, BRL 100 million. BRL 64 million would be the minimum dividend payout. In 2021 and 2022, we paid the minimum payout, and in 2023, we had BRL 100 million declared, so it is 64 being the minimum payout, but we have another 36 additional payout. With that, we see that the company has a better operation base when we look at the way we have been operating. So for us to grow the same PSV, we have a larger base in operation. So the cash generation in the future should grow, combined with the SOS growth. So the payout ratio should grow in the coming years. That is our expectation.
That is the trend, but of course, we need to look at our plans on a year-on-year basis. That is the trend. Yes, Herman. Thank you.
Matheus Meloni from Santander asks the next question.
Hello, everyone. Congratulations on your results, and thank you for taking my question. I have two questions, actually. How do you see the labor costs in São Paulo? Is it causing any pressure on operations? What are you doing internally to cope with this increasing labor cost? The second question, what is your expectation, or what are your expectations regarding land bank in São Paulo? Is the market more competitive? What are your expectations? Thank you.
This is Rodrigo von Uhlendorff. I am going to answer the first part of your question. Looking at the costs and the projection of our flats, we look at three issues.
You did not mention it, but I would like to talk about it. I would not say it is the lack of machines, but the machines for the foundations to be built are quite sought after. Vertical transportation, so the lifts for the construction sites. The third item is labor. We have found a solution to each one of them. So for the machines, for example, we have an agreement with a major company that should have machines available for us. So we try and hedge ourselves. The same applies to the lifts. In 2023, we took a decision to have our internal constructions company focusing on hydraulic operations, and that is already being used for 10% of our construction works, and another one focusing on facades. That was really a time bomb we had on our lap.
My answer to you is, we work every day looking at how we can make things happen and how we can be as productive as we've always been. It's not easy. No one here is going to say it is easy, but it's constant work. What I can tell you is that in 2023, we delivered 27 projects, 100% within the budget, 100% meeting the deadline. I believe we're also going to come out of 2024 as winners.
Your second question about land bank, this is Rodrigo Luna. In 2023, we had a record in land bank acquisition. This is a market where there is a lot of supply in the metropolitan region of São Paulo, including the capital itself. There is still a lot of supply, but we see an increase in competition for these plots of land. It's not yet a concern.
As I said, the amount of land bank plots available is large, but we see that other companies have set their sights on them and there is some competition.
Crystal clear. Thank you.
Ruan Argenton from XP will ask the next question. Ruan?
Thank you, everyone. Good afternoon, and thank you for the presentation. I've got two questions. I just wanted to have an overview of your launches. You've been talking about a more robust pipeline for the next year. For this year, rather. I'd like to understand what your understanding of different segments. You said you're going to focus more on the mid-end market. What do you expect to achieve there, and what is your expectation of the SOS for this segment? My second question has to do with cash generation.
[Pode Entrar] has helped in cash generation, but I'd like to understand what you expect for 2024, looking at this growth scenario, and if you expect to see positive results bringing this cash closer to the launch. Those are basically my two questions.
All right, Ruan. Thank you. This is Rodrigo Luna. Thank you for your questions. Plano has a tradition and a history of a lot of development in the low-income segment. We reduced our operations in this market in 2015, and we got back to it about two years ago. It's a very strong market in São Paulo. It calls for a lot of work in terms of affordability because of the interest rate levels. The resources don't come from the FGTS fund anymore. Our approach to this market is not focusing on the short term. It's a perennial approach.
It's a very intense market and with a lot of capacity, a lot of possibilities. We've been calibrating it to be 20%-30% of our pipeline. It could be a bit more, a bit less. 20%- 30%, give or take. The SOS is slightly lower than Minha Casa, Minha Vida. Because as you grow, the demand, or as you go up in income, you go down in demand. Again, about 20%- 30% of our portfolio is going to be there, give or take.
This is João. Hello, Ruan. We don't have official guidance, but we aim to grow at least BRL 500 million in PSV in the Plano & Plano portfolio. That was the objective last year, and we surpassed that with BRL 670 million, and we aim at BRL 500 million this year, another BRL 500 million next year.
Again, this is a target that we have set, no official guidance. That calls for some cash to fund this growth. Our expectation is to have a slight cash generation. Our forecasts show a cash generation lower than last year, but again, it depends on the SOS of the new launches and construction site performance. It is going to be zero or slightly positive in 2024 in cash generation.
All right. Thank you. Thank you, Luna.
This is the end of our Q&A session. We will now turn the call over to Mr. Rodrigo Luna for his final remarks.
Thank you everyone for joining our video conference. That was a challenging year, but it is also a year that we started with a lot of optimism.
In the low income front, all of the Minha Casa, Minha Vida adjustments allow for more families to be involved in the real estate credit, making the market a bit more attractive or a lot more attractive with faster sales. We have been leaders in this market in the city of São Paulo, and we believe that 2024 is going to be an excellent year. In the mid end or low mid end, this is a market with a lot of potential. Of course, the lower the interest rates in the course of the year, looking at the decisions of the Central Bank of Brazil, the better for this market. Plano & Plano is very optimistic with the objective of maintaining the sustainable growth that we have been maintaining in the past years, and we have been setting new records quarter after quarter.
Thank you everyone again for joining the call, and have a great weekend. Thank you.
This is the end of the Plano & Plano fourth quarter earnings video conference. Thank you everyone for joining. Have a great day.