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Good morning. Welcome to Even Construtora e Incorporadora teleconference concerning the results for the second quarter of 2021. Present with us today, Leandro Melnick, CEO; Carlos Wollenweber, CFO and IR Director; and Tiago Krall, Financial and Investor Relations Manager. We would like to inform you that this event is being recorded. [Operator Instructions] This event is also being broadcast simultaneously over the Internet via webcast. It may be accessed at website www.even.com.br/ri. The replay of the event will be available as soon as it ends.
Before we proceed, we would like to clarify that any statements that might be made during this teleconference regarding business prospects of the company, as well as its operating financial projections and goals are based on beliefs and assumptions held by Even's Board, top management and all the information currently available to the company. Forward-looking considerations are not guarantee of performance and involve risks, uncertainties and assumptions since they refer to future events that depend on circumstances that may or may not happen.
Investors should understand that general economic conditions, industry conditions and other operating factors may affect future outcomes for the company and may lead to results that materially differ from those expressed in this consideration. Presentation slides are available for download on the Internet at the following address, www.even.com.br/ri.
I'll now -- I'd like now to give the floor to Mr. Carlos Wollenweber, Even's CFO. Mr. Wollenweber, you have the floor.
Good morning, everyone. It is a pleasure to review our operating and financial results for the second quarter and the first half of the year. Firstly, I'd like to go through the highlights of the quarter in Slide 2.
In the graph on the top left side of the slide, we show you the volume of launches in the first half, which totaled BRL 931 million Even's share and represents 249% growth when compared with the same period of 2020. Keep in mind that the second quarter of 2020 was significantly affected by the beginning of the COVID pandemic in Brazil. Our net sales totaled BRL 940 million in the first half, which is in line with our volume of launches and represent a 69% growth in relation to the first half year of 2020.
In the graph on the right side, we show you our net income, which more than doubled in the period, totaling BRL 138 million in the half year and BRL 54 million in the quarter. It's an annualized return in the half year of 16%. In the quarter, we paid dividends to the amount of BRL 157 million. And even so, we are able to keep a robust cash position of BRL 1.3 billion. In the graphs on the bottom side of the slide, we show you our operating cash generation for the half year, which totaled BRL 237 million, a 27% growth year-over-year as we ended the quarter, with BRL 361 million of finished inventory, a decrease of 56% in relation to the second quarter of 2020.
On Slide 3, we have the breakdown of our launches. In the first half year, launches totaled a PSV of BRL 1.2 billion, and BRL 931 million of which is Even's share. In the quarter, Even launched the Modo Pompéia project with a PSV of BRL 171 million targeting the lower income segment. It was a success and we ended the quarter with over 70% of each GSV already sold. The next 2 slides we can see the pictures of the projects that were launched by Even in the first half year, highlighting the quality of our products.
Moving on to Slide 5. We have the details of our net sales in the quarter, totaling BRL 354 million, representing an average SoS of 16%. Launch SoS remains strong at 49% in the quarter. In the year, we saw, net of cancellations, BRL 940 million, a 69% growth when compared with the same period of last year. Cancellations in the corner on the graph on the right side of this slide sitting in the same level as previous quarters. In the first half year, cancellations had a nominal reduction of 8% when compared to the first half of 2020.
In the next slide, we show you our inventory position. We ended the second quarter with a total inventory Even's share of BRL 1.9 billion, of which finished inventory represents 19% of the total. It is important to notice that of the deliveries expected for this year, only 11% has not been sold. And for the projects expected to be delivered in 2022-2023, approximately 2/3 have already been sold.
In Slide 7, we show our deliveries. Even delivered in this quarter Vistta Alto da Lapa project in SĂŁo Paulo with a PSV of BRL 136 million. Once again, the pictures highlight the distinct quality of our products. On Slide 8, we show our land bank. In the quarter, we purchased 7 lots totaling BRL 449 million and in the half year 9 lots with a PSV of BRL 1.2 billion. Our land bank, Even's share, amounts to BRL 6.3 billion split into 60 lots, mainly located in prime neighborhoods of the city of SĂŁo Paulo and in Rio Grande do Sul.
In the next slide, we show our capital structure. We generated BRL 237 million in the first half year, BRL 11 million in this quarter. We ended the quarter with a net cash of BRL 876 million, which represents 35% of our equity, representing a very comfortable capital structure. In the second quarter, Standard & Poor's raised our rating to AA+ with a positive outlook. In the second quarter, we distributed BRL 157 million in dividends, and we ended the period with a consolidated cash position of BRL 1.3 billion.
Finally, in Slide 10, we show our financial performance. In the graph on the top left side of this slide, you can see our net revenue, which amounts to BRL 1.2 billion in the first half year and BRL 522 million in the quarter, which is an increase of 54% and 40%, respectively when compared with the same period of last year. Our gross profit has increased in the same proportion, 50% in the half year, 50% in the quarter. Our net income, seeing the graph on the bottom side of this slide, was BRL 138 million in the half year and BRL 54 million in the quarter, which represents an annualized ROE of 16% and 12%, respectively.
It's essential that we understand the details of the return we are delivering. Even SĂŁo Paulo, which is a company that's already at cruising speed, delivered an annualized ROE of 20% in the first half year and 15% in the quarter. It is natural that in the short term investment we have made in Melnick brings our ROE down due to Melnick's being on a growth curve and using that in the capital raise in its IPO. Keep in mind that Melnick has delivered an average ROE of 20% between 2010 and 2020 pre-IPO, therefore, is an investment in those future returns we have confidence.
Now I'd like to give the floor to Leandro, Even's CEO.
Good morning. We are very happy with the results that have been accumulated in the first half of the year. Although an adversity, the half year completely impacted by the economic consequences of COVID, an increase in interest rates and an increase in costs, the market has been absorbing our products quite well. We have been able to reach a good sales -- speed of sales in our products, and we have been controlling our costs. As a result, we have increased our profits in our main indicators when compared to the first half of 2020. I'd like to point out that in line with our strategy of the high cash position and as a result, we're able to show an ROE of 16% for the company and a 20% ex Melnick. Due to Melnick's recent IPO, this analysis is very relevant.
Another point I'd like to point out is in relation to our launches in this first half. We held up on some expected launches, and we transferred the launches to the second half because we believe the market will be better. The economic activities would go back to normal, even though we launched in the first half BRL 931 million, an increase of 250% in relation to the previous half year, and we have a land bank of a PSV Even's share of BRL 6.3 billion. This makes us very confident in the second year and in our mid-term future.
We'll now proceed to questions.
Our first question comes from Alex Ferraz, ItaĂş BBA.
I have 2 questions. The first one in relation to launches based on especially in the first quarter of the year. We had a decrease in the net launches. How do you see this in the second half. And a question related to approvals, if you see any noise in relation to this, if you're going to continue with the launches. And the second question is in relation to margins, in terms of the margin of inventory. It's showing a great improvement, especially the inventory margin. It was close to 30%. If you have any project to improve these margins, which will differ from gross margin to this margin we have now?
Alex, Leandro here. Thank you for your question. Let me talk first about the launches and Carlos will pick up. Our allocation for the second year is there in typical half year for -- in terms of launches, we understand the market has had some potential improvement related to our economic activities. This is our expectation as Brazilians and generally speaking will help to have a more active second half of the year. In the second half year, we hope to have a better pricing condition.
Even has been able to price our launches considering the INCC rates. So if we see some difficulties in the market, obviously impacts our margin and in the second half year was a longer period in relation to this higher increase in INCC and in other industries. We understand that this recovery in terms of pricing margin will be more secure in relation to all our products. We concentrated intentionally our launches on the second half as we saw the second wave of COVID gaining strength. So we have this strategy to price our launches as we had expected for the year and concentrating this in the second half. Carlos now will answer the other question.
Alex, this is Carlos. In relation to our gross margin. We delivered a margin that's very close to last year's. When we look at the [ REF ], the backlog margin and the gross margin, we are higher, 25% in the quarter. Our backlog margin is pointing to a 31% margin, substantially because we let the finished inventory, which shows lower margins, the most part of it is behind us. When we look at the inventory we are selling nowadays, which signals a higher margin than what is showing in the results, is a new inventory that we have launched recently and where we have been having some gains in prices in relation to our sales projections. We have been having a real gain in prices for these projects recently launched. This is where the margin is higher in inventory in our backlog margin, which signals an expansion -- a marginal expansion in the short term.
Our next question, Gustavo Cambauva from BTG Pactual.
Two questions. A quick question that's a follow up on the previous question. Leandro has already commented in relation to price. I would like to understand how you see, in light of the current moment, you see prices going up in banks. How we are increasing their interest rates for mortgages? Obviously, especially in SĂŁo Paulo, with the hike in price has been strong, if you have some concern in relation to a decrease in demand or if you expect a high demand in line? Is this what the company is thinking in terms of products in this scenario? You will have in your land bank some bigger projects. If they are here to focus on these projects that are more high-level, more distinguished projects, is it going to change something in relation to what it compares in June? Now we can deal with these higher prices that can impact the demand.
Cambauva, this is Leandro. Thank you for your question. Let me mix both questions because it will help be clear about how I see this, the 2 points come at. We can see the raising prices in some of our -- the products we have been working on. It's a consistent -- it's compressed because we bought the land to sell for a specific price per square meter. So we have seen an increase in costs. We took the risk of placing -- of transferring the rising cost to the price and the effect in the speed of sales in the segments of the market. And we are able to have the market accepting this new price, which at the beginning was challenging, both in our launches and even in some part in the inventory, which affect our margins. So the market has been absorbing the increasing costs.
We believe that part of this is due to the products -- and now answering your second question, the products to which we made an option for some -- to focus on some areas of SĂŁo Paulo where the market is very strong, the sales in all the chain, the real estate chain. And with that, our differentiated products is an internal jargon we have and is distinguished product. It's not just the high end. It means to put some distinguishing factors in terms of quality in the common areas, for example, tennis courts and other, in all of our segments. So we have been working in all of our segments in our portfolio rate income and up.
We have been positioning ourselves in all our products with a little higher product in relation to the competition, but with a product with more attributes, with more features. And this strategy has been working up because the market has been recognizing these features, has been paying more per square meter. So we think this is the way to go. So it's a way to transfer our costs and also a macroeconomic analysis. When you look at 12 months period, we have this increase in INCC. So as we get farther from 2014, real estate is significantly cheaper than it used to be in the past. So there's some gap to recover because we have been going for many years with real estate at a very low price.
So we are very aware that -- about the moment and another internal indicator that I'm sharing with you that also shows this factor, this price in the market. The fact that the market is absorbing our project, even with a price hike, is our portfolio, our receivables. We are at the lowest level of default in Even's history, which would be questionable in a moment in which the index that adjusts the installments our customers pay increase much, much higher than the revenues our customers would have. This certainly shows a very strong receivables because customers see that this is the new price. And this is still a good option to buy. It's an indirect indicator, but it shows clearly that customers still believe in the products at this price.
Our next question, André Mazini from Citibank.
In the first quarter, in the second quarter, it's a little negative. When do you think this is going to stabilize, this decrease? I think it's related to older projects and also the net income. Where do you think the margin ex-Melnick given the dynamic prices of Rio Grande do Sul -- when this margins will improve?
André, Carlos here. First, let me talk about our other lines -- this line, others. We had an increase in provision because of provision for future deliveries, which came essentially from Melnick. And we had a line of legal settlement and provision for new contingencies of approximately BRL 15 million. The provision for new contingencies is in line with this number that we expect every quarter. And the settlements came in a little higher because we are in a moment of moving up some negotiations, anticipating some negotiation, and in order to be able to deal with these decisions back because we make the decisions before we go to an appeals court and decrease this overhead in our administrative work. We imagine that this settlement with new provisions would be between BRL 10 million or BRL 11 million, which is the average we have been delivering in previous quarters. And this one was a little higher.
In relation to margin, as I commented when I answered, if I'm not mistaken, to Alex's question, we have today a margin, both inventory and in the backlog margin, a little better than we have had in the last 2 quarters. And keep in mind, we decreased the volume of finished inventory in the company. And in both companies, the volume of inventory -- of finished inventory, is very low, of commercial inventory is very low. And now what we have is the new inventory, and we're being able to transfer the prices a little bit above INCC. So this new inventory is showing a better margin. Both companies have a margin -- a gross margin that's a little bit different. These margins will not converge in the short term to exactly the same margin. So even if it's stable at the margins we have been delivering, whether it's incremental increase because of the new batch. And Melnick is at an ascending curve, a growing curve, which is a different model of acquisition, including how we buy land, which will increase this margin in the near term.
Next question, Marcelo Motta from JPMorgan.
Two questions. If you could comment on how the financing is at the end when you're talking to the customers. If you can see an increase, what this level is when you compare this with 6 months ago? And the other question regarding materials. If you have seen an increase in prices of raw materials or if this is going back to if the suppliers are able to reduce the price?
Motta, this is Carlos. Let me talk on the first question, and then Leandro will comment on the second. Financing rates. We have seen all banks, with except for Caixa Econômica and Banco do Brasil, but our main finance, Itaú, Santander and Bradesco increase a little their interest rate on financing for the end user, for the -- for companies, which is less important, but we haven't had an increase with interest rates. On average, our customers are financing. We haven't had a movement in -- we had a movement in the beginning of the year of high, of buying from Poupança Bank. But as we see the inclination of this interest rate curve, customers prefer the pre with TR plus, and thereby something between 7.5% and 8%.
Most of the customers, they have a good affordability. So the volume of financing is a little lower than 50% when we transfer. This is finance, total in finance, executing in terms of this visiting in interest rates we have been going through. The reduction in interest rates helped us immensely to reduce our volume of finished inventory, which is a customer that already transferred at the moment they buy the unit. Until now, we have it in as an impact. But this increase announced by the banks, it is still marginal. It affect our customers very little, and we are keeping an eye on this as the situation evolves and the curve -- the interest curve changes in relation to any kind of adjustment of interest rates, the bank to which we transfer the financing to.
Continuing the second question regarding costs, your question is interesting. It's a deep analysis we perform. We have a tool that we call on virtual budget and it's updated -- that we update all the indicators, considering the last -- what purchases, the purchases we do every day. So we have our own cost basket. It was -- it had increased above INCC. In some areas the change in cost was significant in the last months. Our internal cost has been approaching the INCC, so we have been reversing the start, and this happens. So your question is quite our product. The cost basket regarding the product has been losing the pressure. The pressure has been lowering in relation to the increasing costs that hasn't helped, was extremely aggressive a few months ago, which had impacts in labor. In previous months, INCC increased more than our return of cost basket, approaching our INCC index to our internal costs, which is good news to us.
And following the same rationale of the previous question, when we look the price of the value of our property per square meter, from 2014 to now, the real estate was cheaper in the past than it is now, and the problem, we were very highly concentrated on INCC. We have problems with costs, which follow the long-term evolution in several materials from 2014. Now most of the ones we increased more recently. They haven't had such a distorted behavior in relation to inflation. We've got some recovery which is in months and in one year after a long time of stagnation in terms of material prices for the materials. And in the mid and long term, these prices will converge to a balanced level. We had a period of a high level INCC due to external, internal questions, commodities, et cetera. And now they are, as it always happens with these indicators, they are -- that they show the consumption of different segments, so objectively speed. Now it's showing less pressure. The rate of the pace of this increases is slowing down.
Next question from Santander.
I have a single question. What is the process for approvals now out there in SĂŁo Paulo? We had a change in the mayor. So regarding the project that were hired before, we have seen a change in approvals?
It's an important question. In these effects in the short term, we had a first half year that was atypical more in relation to COVID issues than City Hall. It was highly affected. It was -- it works was paralyzed because the usual bureaucracy was paralyzed. And this affected, objectively speaking, the pace of approvals. And this has been solved a short time ago, and we have seen an important effect in the past 2 weeks. It's one more factor that we consider positive and it allows the prospects for the second half, because your question is related to the mayor -- the new mayor or because of the city's management. But because of the decrease in person labor, this has started affecting the pace of approvals. And now that this is going back to normal in these past weeks, I believe in the second half it will be normal again.
Next question from Pedro Lobato from Bradesco.
Two questions. First question in relation to the competitive environment regarding the land. It puts pressure on the prices. And the question about capital structure. What do you think in terms of evolution for the next periods. If you see this increasing -- increase in the period.
Pedro, regarding the first question, I thought about the second and forgot the first. Repeat the first question, please.
Regarding the competitive environment.
It's an interesting point. We had a moment relative recently, 1 year, a potential wave of IPOs. We had a moment this increased the competition for land. It begins back with options and then confirms the purchase. So we had a race for land in SĂŁo Paulo. And this impacted the prices. And then it calmed down significantly. So recently, what's been happening in regarding to land is not what most people believe. People who are not in the business, they think that we have a competition for land and impacting the price, or one trying to overbid the other one.
What happened, which makes difficult, is the increase in the construction costs because when we buy the land we do perform a feasibility study, and we define a sales price, yielding a margin that we understand it's a good margin for us. But since the construction cost has increased a lot in both the construction costs out there, so we become more afraid of this -- if this new sales price will be absorbed by the market. So we have been very cautious when buying land with some initial difficulty because of this logic that the construction cost is increasing and the land did not lower their expectations in light of this competition. So this is already being managed because after 2, 3 months we put impression on the owners of the land, and they start getting aware of the new reality.
So several pieces of land we are negotiating, we were able to hold on to the original price. In respect to the last month, we were able to buy land with a good margin for a good price, and the level of competition is a little lower. And the owner of the land has fewer options in order to try and increase the prices and in relation to the price that is actually -- the market wants to pay for. So we now have a more balanced, a more rational position in terms of prices for land in relation to last years in which we saw acceleration of this prices and prices rise. And to me it was because of this potential IPO wave that did not happen. Now I'll ask Carlos to answer the question.
When we talk about capital structure, it's important to separate Even's balance and Melnick's balance, which is -- are now not communicating anymore. Even, we had a strategy of growing and increasing cash. Even is more at a cruise speed. Before, we paid BRL 157 million in dividend. And we now deliver a high ROE with a very comfortable capital structure and with a high cash position. So that at Even, if we don't include the investments we made in Melnick, an ROE of 27%, keeping a cash position of BRL 700 million at Even, which puts us in a comfortable position to have cash to take advantage of new opportunities.
You can see a market that's a little more [ stagnant ]. While it increases some opportunities that come our way buying land or some partnerships, we are always exploring opportunities as well as protection. In an uncertain scenario last year, we had elections. We have been going through a discussion involving tax reforms. Then we had some instability. So it's important for the company to have a robust cash and high liquidity. So we are creating the best of the worlds. We have an ROE of 20%, which is good, and a cash position that's comfortable and a negative leverage position nowadays. So we advanced the dividend payment. We paid dividends twice this past year. We are constantly looking at our capital structure, but we are very comfortable with the position we have now.
[Operator Instructions] We now close question and answers. I would now like to give the floor to Carlos Wollenweber for his final remarks.
Well, again, we are very happy with the results we have delivered -- the results we delivered in this quarter and in the half year. We thank you all for your participation in the call, and I'll see you at our next earnings call. Thank you very much. Goodbye.
Even's earnings call is now closed. We thank you for your participation. Have a good afternoon.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]