Lavvi Empreendimentos Imobiliários S.A. ($LAVV3)

Good morning, everyone. Welcome to Lavvi's conference call to announce the results of the fourth quarter of 2025. The presentation and comments are going to be presented by Ralph Horn, CEO; Sandra Attie, CFO; and Vitor Charak, IR Coordinator. [Operator Instructions] This conference call recording will be available at the company's investor website, where you can download the presentation and the slide deck, too. [Operator Instructions] Before proceeding, forward-looking statements are based on information currently available to the company and on beliefs and assumptions of Lavvi. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. Analysts and investors should consider that they depend on the macroeconomic scenario and other factors that may lead results to be materially different from those expressed in forward-looking statements. Now we are going to start the presentation. Giving the floor to Mr. Ralph Horn.

Good morning, everyone. I would like to thank you for being here. It's always an honor to have you here to talk about Lavvi's results for the fourth quarter of 2025. We are very happy with Lavvi's performance in this fourth quarter. We had 3 new launches in addition to the second phase of Novvo Vila Prudente. We started with the launch of Casa Cerâmica in São Caetano, an absolute success that sold out very quickly, and there was even a queue to buy. Then we launched Novvo Anália Franco that did very well. And finally, we had Zen with Cyrela and Moema, which is 40% sold today. On the operational front, it was the second best year in Lavvi's history. Regarding our accounting recourse in 2025, we had records in the lines of revenue, gross profit and net income. This year, we're burning cash as a result of relevant investments in land. I want to thank everyone for their presence. And we had many launches in 2026. In October, we raised BRL 400 million, and then we strengthened our gross cash to keep buying land. Now we are getting ready to the biggest launch, the biggest one in São Paulo, which is the Hípica project. We had a meeting yesterday. There were lots of people, from 700 between -- and 800 brokers. Now we have a little bit more than BRL 1.3 billion PSV and [ 1,060 units ]. In 2026, it's going to be a very challenging year so far. Things are not easy. Interest rates are high. The world is complicated with the World war tribulations. But as usual, we are going to follow the market very closely and make the best decision at each time for each launch to reach the best results of the company. Thank you very much, all shareholders and analysts. Now I would like to give the floor over to Sandra for the operational results.

Thank you, Ralph. Good morning, everyone, and thank you for the presence. About the launches on Slide 5, there is Novvo Vila Prudente. We opened the second phase, and we booked the entire project in the 4Q. We have a plot of more than 4,000 square meters, 900 units and BRL 275 million of potential PSV. Here, you can see the pool and the roof top with an open-air cinema theater. Today, we have almost 50% of sales. And then we launched, in a partnership, Casa Cerâmica in São Caetano, the first project of Lavvi outside the capital, a differentiated plot of land, a very large plot of land, differentiated product, 3 towers with apartments with 130 square meters, 171 square meters and 42 square meters, full leisure and services provided by CBRE. The product really attracted people in almost 1 month with 0 sales. On Slide 7, another My Home, My Life project, very close to the shopping mall with almost 600 units and BRL 178 million SOV and we have 78% sold. And today, we have 85%. With the [indiscernible] project, low-income for Novvo brand has become more relevant with a larger share in our businesses. We are excited to keep operating on this segment with new plots of land. On slide 8, the last launch of the quarter in partnership and under the management of Cyrela Zen in Moema, right in front of Ipê Club with a potential PSV of BRL 681 million. So we had a great quarter and year in terms of launches and sales, as you can see on Slide #9. In the quarter, we launched BRL 1.8 billion PSV, and we sold BRL 1.4 billion. Comparing to 2024 in terms of launches and sales, we had a slight drop of 11% and 15%. As a reminder, in 2024, we had 3 launches that have been delayed from 2023, which [ faced ] the level of the year. Our SoS was 32%, the best quarter in the year. And if we consider the last 12 months, our SoS is still above 50%. Now moving to Slide 11, you can see the evolution and the breakdown of our inventory per season of delivery and stage of the project. So as you see, we launched BRL 1.8 billion PSV in the quarter. Senior management knows how important it is to keep the inventory under control, negotiations underway and works intensely to try and solve any problems that may arise. On Slides 13 and 14, you can see the deliveries of 4Q, High Wonder and Verdant. Both projects were launched in 2022, and they were very well sold at first. In November and December, we delivered them. And today, we have only units for High Wonder and Verdant, and we already have 90% of those 2 ventures sold between transfers and settlements. Considering our portfolio, it was not difficult to approve the credit of our customers at the bank and to solve this portfolio. Now moving to Slide 15, you can see the Landbank breaking down, My Home, My Life and high, mid and high, and luxury. So we have BRL 5.9 billion in the percentage, 16% in our share for the brand Novvo. We have negotiations to buy new plots of land for both brands to complete the pipeline from 2027 onwards. Now I would like to give the floor to Vitor for the financial results.

Thank you, Sandra. Good morning, everyone. Starting on Slide 17 with the financial highlights of the fourth quarter of 2025. Net revenue was BRL 530 million in the quarter, 8% below 4Q '24. In the year, we had a 14% year-on-year increase, a record for Lavvi. The adjusted gross margin was 35.5% in the quarter and 37% in the year, 1.5 percentage points above 2024. As a result, net income reached BRL 105 million in the quarter and BRL 414 million in the year with a net margin of 23.5%. Our ROE was 28%. Backlog grew 19% compared to the same period of the previous year. This quarter, we had cash burn in the amount of BRL 45 million. In the year, we burned BRL 119 million cash, and we would have generated BRL 372 million without the investments in land. Finally, we ended the quarter with a net debt of BRL 394 million. In addition to these results, on Slide 18, on the right, we have the financial result. So this positive change is a reflection of more robust gross cash flow and a higher Selic in 4Q. At the bottom of the slide, starting with G&A, we had -- we see a high that reflects the company's growth and investments in systems and improvements. Despite the nominal increase, we managed to remain practically stable in terms of percentage in net revenue. In commercial expenses, we increased 23% in the quarter, 4% in the year. Finally, net income in the quarter was 13% below 4Q '24. In the year, net income reached BRL 414 million, a record for Lavvi and 21% above 2024. On Slide 19, we see a constant growth of net revenue and net income year-on-year with 20% -- margins above 20% since the IPO. In Slide 20, you can see the ROE of 20%, proving resilience. Next slide, you can see revenue -- backlog revenue totaling BRL 2.8 billion, up 19% against the previous quarter, driven by launches. The 37.5% margin implies more than BRL 1 billion gross profit to come. Then on Slide 22, this quarter, the company burned BRL 45 million cash, which would be a generation of BRL 53 million discount investments in land. In the year, we burned BRL 119 million in cash and generated BRL 372 million in the ex land bill. Now Slide 23, on March 27, we are going to pay the first installment of dividends as decided in January of retained earnings reserves. So we have exceeded the mark of BRL 1 billion paid in value generation paid out to shareholders since 2021. Thank you very much for your attendance. And now we are open for questions.

[Operator Instructions] So our first question comes from Bradesco BBI.

I have two questions. First, related to commercial expenses. They are slightly higher in Q4 and very much related to Cerâmica. So could you give us more color on which were these additional expenses and if the commercial expenses will remain at the same levels? So an update about the Hípica and what you expect in sales when the project is launched?

This is Sandra. I'm going to talk about commercial expenses and then Ralph will talk about Hípica. So the [ effect ] with Cerâmica is usual expenses, marketing, advertising, everything that is necessary for a launch. Usually, these expenses come 6 months before launch. And what happened for Cerâmica that we started Q4 as partners of the venture and then we only got to know about incurred expenses in this quarter. That's why it's concentrated in that quarter, and that's why it's high.

So Hípica is the following. For Hípica, we have the meeting Tuesday night. We've been for 2 months working with brokers. The opening of the work will be on Saturday. And then we are going to open, decorate it and we are going to start the first phase. We would like to sell 25% of the project by July this year, still too early to talk. So many brokers are joining and the game has only just started, and we are very excited, but it's still too early to say anything.

Our next question comes from Gustavo Fabris from BTG.

Two questions. First, for the gross margin performance, which is the highlight of the quarter that dropped a little bit quarter-on-quarter and year-on-year. Could you give us more details of what is underlying this? And if you look at the REF margin, so it has increased because of mix of projects that are delivered because REF margin. So can you see the accounting margin for 2026 going up very much related to new projects with higher margins that contribute to the result? So the second one is about inventory, especially ready units, specific of Villa Versace that concentrates most of your inventory. So could you give us your vision? And what do you see -- how do you see this project? And what has already been delivered? If you are worried? Would you try to be more aggressive in sales, reducing margins to monetize inventory faster?

Thank you very much about the question. About the gross margin, this quarter, we adjusted the cost of the projects that we are going to deliver. So there is a shortage in labor. And so we are within the waiting period, another 2 or 3 months. So sometimes we need to reverse part of the revenue. And so we have this impact in the gross margin. About the performed receivables and the margin, there are some projects from 2022 whose margin is suffering more and they are being delivered now. So once we zero the inventory, it gets out from the margin and we replace it for other projects that we have been launching more recently with better margins. So the margin is likely to go up.

Gustavo, so inventory is something that we are really concerned about. We are very organized in our -- for Versace. We could not work last year because the construction delayed. And we were in a hurry to transfer everybody so that we could start if we had to, say, at a slightly lower price, not to cause any problem with previous sales. We are seeing many people. This year, we have already sold the studios. I think we have 3 or 4. So we have 18 still large. So there will be a bonus and it is something that we are monitoring closely. It's difficult to say. [ Much hard ] the worker. We are monitoring it closely. This is what we can do. We are going to monitor it closely to sell inventory. We don't like inventory. If we need to lower prices, we will, and we are going to get 2 amounts that will give us liquidity. But for a high standard, it's not about lowering prices about their liking. And it takes a while for them to mature the idea. There are many offers. They see many projects. So this year, we want to zero Versace.

Our next question comes from Elvis Credendio from Itaú BBA.

I have two questions. First about the pipeline of projects this year. Is there any project that you are more excited about? Is there anything else that you're more excited? And also in that sense, what about the approvals of permits? Can it affect the pipeline? And the second item is about the market as a whole. We have heard news of a higher inventory in São Paulo, especially high standard units. There is a growing volume, but sales volume is still high. So the number doesn't seem to be too high. So are you worried about that? This may change a little bit your launch strategy. And what you see in terms of competition with that regard?

So first, we have a very extensive pipeline for this year. So for Novvo, we are launching Santa Marina, which is right across from the subway station. So the first phase with 400 units. Phase 2 next year because we are decontaminating the land. So we have Hípica, huge project that is coming out now. We also have Clodomiro Amazonas high standard for this year. We have another in Paraíso studio right close to the [indiscernible]. So we were very successful. In Studio 6, we bought a new plot of land to repeat the doors. We have a big project in Moema, almost BRL 800 million PSV. And we have another low income, and we might try and have another one close to Anália Franco. So we have quite a few projects. As to permits, so what is with the city may affect, most doesn't affect because they are at a phase that this makes no difference. The only thing is that there is 1 or 2 that the city has canceled 100% of the permits for demolition. They're not giving any permits. This might affect, but most of them, we are still in the phase that this doesn't affect. So this affects the market. And there's not much to go into the future. January and February, we think that the market is good, especially My Home, My life, lots of liquidity. And we want to sell at least BRL 100 million. We've reached that in January and February. And January is a very difficult month with summer vacation, the February's Carnival, but the market is active. Even though the interest rate is very high, we have very good products. So My Home, My Life, we have one with lots of inventory. It sold 18. So now with a little bit more liquidity. So for each inventory, we have a product manager that looks after it, looking after what happens in the weekend. So we really want to sell because sales means -- sale of inventory means cash.

Our next question comes from Ygor Altero from XP.

I'm going to follow up on the permits. So as to the timing, how long do you think it might take? And the second question is more related to low income. So how our launch is evolving in terms of share because low income will win overall? Which are the challenges that you're seeing? What are the lessons learned? And this is what I wanted to know.

As to the permits, we think that we are going to solve that this month. So I think that the city and the legislative branch have decided because this affects everybody. As to My Home, My Life, we are very excited with lots of liquidity. My Home, My Life is under production. We still need more labor. We are going to extend delivery times. For My Home, My Life, it's going to be 6 months, but we're really racing. But the challenge of the industry is that many construction companies are failing to launch and not launching everything that they could. The challenge is in the production. We still have a problem with the lack of labor should not be solved in the short term. And the new law of 6-1 might make matters even worse for us. But the market is very warmed up. So lots of people to buy the product. I think it's still good, but we are going to adapt to new terms, new times and to the reality.

So just a follow-up as to the 6/1 work shift. Is this going to impact labor?

Well, I can ask engineering department. I don't have it at the top of my head. So usually 40% is labor of the total cost of the development.

[Operator Instructions] The question-and-answer session has now ended. We would like to turn it over to Mr. Ralph Horn for his closing remarks.

Thank you very much, everyone. We are very excited as usual. The company is growing. We are digitizing the company more and more internally. And we are very excited with the market, and we expect to be able to deliver better results this year than last year. Thank you all very much.

We are now ending our conference call. We thank you all very much for your attendance, and wish you a very good day.