Even Construtora e Incorporadora SA

BOVESPA:EVEN3

Earnings Call Transcript 2019-Q4

[Operator]

Welcome to Even Construtora e Incorporadora's teleconference concerning the earnings release for the fourth quarter of 2019. We would like to

[Audio Gap]

Leandro Melnick, CEO; and Carlos Wollenweber, CFO, are present here with us.

We would like to inform you that this event is being recorded and that all participants will only be listening to the teleconference during the company's presentation. Immediately after that, we will begin the Q&A sessions for analysts and investors only, and further instructions will be provided. [Operator Instructions]

This event is also being broadcast simultaneously over the Internet via webcast. It may be accessed at the website, www.even.com.br/ri. The replay of this 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 for the company as well as its operating, financial or projections and goals are based on beliefs and assumptions held by Even's Board and top management and no information currently available to the company. Considerations about the future 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 these considerations.

The presentation slides are available for download on the Internet at the following address: www.even.com.br/ri. I would like now to give the floor to Mr. Carlos Wollenweber, the CFO. Mr. Carlos -- Mr. Wollenweber, you may proceed.

[José Carlos Filho, executive]

Good afternoon. Thank you all for being present at Even's conference call to present the company's results for the fourth quarter.

Before moving on to operating financial results, I would like to present some of the highlights of the quarter and also of the year. In 2019, we have recovered our volume of launches, which totaled BRL 2 billion Even share, which represents a growth of 91% in relation to the previous year. We've grown 30% over the year totaling BRL 1.9 billion. We have seen growing profits that total BRL 119 million in the year. We have generated BRL 95 million in cash and BRL 277 million in the year. In the last 3 years, the cash generation surpassed BRL 900 million, so our leverage given by net debt-to-equity ratio dropped to only 24%. Our cash balance is very robust at BRL 940 million, which gives us including to go to reducing certain volume caused by the coronavirus. In addition, we have built an outstanding pipeline of projects to be launched along the coming years.

Moving on to operating results in the next slide. We launched BRL 808 million in the fourth quarter and BRL 2 billion in the consolidated year, representing a growth of 33% and 91%, respectively, in relation to the same period of 2018. Of the launches in the fourth quarter, 85% were in the middle and upper income segments, being 80% in São Paulo, 15% in Rio Grande do Sul and 5% in the Rio de Janeiro. Net sales, presented in the next slide, follow the growth of launches, amounting to BRL 600 million in the fourth quarter and BRL 1.9 billion in the year, a growth of 79% and 65%, respectively.

The highlight goes to the launches, which were sales over supply growth, which was 48% in the quarter. Another point worth mentioning is the consistent reduction in cancellations, which were only 11% in the quarter and 15% in the year, less than half of the amount of the previous year, which was 30.6%. Of our net sales, 68% were in São Paulo, 22% in Rio Grande do Sul and 10% in Rio de Janeiro. Due to the decrease in interest rate, a greater appetite from banks and the recovering confidence levels of our customers, we are improving the sales performance of our inventory, as you can see in the next slide.

In the year, we sold BRL 676 million of finished inventory. However, given cancellations amounting to BRL 327 million and delivery of projects with units in inventory representing BRL 359 million, we closed the year with BRL 801 million of finished inventory, 40% of the total, as you can see in the upper right-hand graph. Although it is a higher percentage than we understand as appropriate, the sales of this inventory will continue contributing positively to our cash generation. Add in the PSV of unsold units still in the construction, we closed the fourth quarter with a PSV of inventory of BRL 2 billion, representing approximately 13 months' worth of sales.

Moving on to land bank on the next slide. We purchased 5 land plots in the fourth quarter with a PSV of BRL 697 million. Our land bank is solid at BRL 6.5 billion. It's worth noting that 70% of our land bank was acquired through swaps, which reduces our carryover costs. 61% of our land bank comes from plots purchased in the last 3 years. Along 2019, we had a hefty volume of deliveries as seen in the next slide. We delivered 14 projects in the year, meaning BRL 1.4 billion of PSV and 2,765 units.

In the quarter, we delivered 4 projects, 1 in São Paulo, 1 in Rio and 2 in Porto Alegre, representing BRL 651 million of PSV and 1,380 units. We continue producing strong cash generation amounting BRL 95 million in the quarter and BRL 277 million in the year, bringing our net debt-to-equity down to 24% against 41% at the end of the fourth quarter of 2018. We closed the quarter with a solid cash position of BRL 940 million. And excluding debts at the project level, we have a net cash to equity of 11%.

We remain focused on improving our efficiency indicators. As a result of the austerity on administrative expenses and the increase in the launches in sales, our G&A to revenue ratio was 6.2% in the year against 8.9% in 2018, as can be seen in the next slide. Our G&A to launch PSV ratio was 6% against 12.6% in the previous year. We also have been very conservative regarding provisions for labor and civil liabilities and cancellations. Together, these provisions add up to BRL 217 million. It's important to mention that in the last 2 years, these contingencies have been under control.

In the next slide, we delivered a net income of BRL 1.9 billion in the year and BRL 480 million in the quarter, a growth of 30% and 22%, respectively. Our gross profit was BRL 476 million in the year, BRL 114 million in the fourth quarter, a growth of 134% and 192%. Our adjusted gross margin in the quarter was 28.7% against 18.3% in the quarter of 2018. In this quarter, we delivered a gross profit of BRL 114 million, in which São Paulo contributed BRL 78 million, Rio Grande do Sul BRL 39 million, and Rio de Janeiro had a marginal gross loss of BRL 2.5 million.

It's important to highlight that São Paulo has a very healthy backlog margin of 37%, Rio Grande do Sul at 30.8%, whereas Rio de Janeiro still pressures negatively our consolidated margin because of the discounts we're offering to sell inventory. [indiscernible] participation decreases. We'll see an expansion in the consolidated margins. As a final result, we delivered a net profit of BRL 119 million in the year and BRL 31 million in the quarter, which makes up for an ROE of 7.4%. We are confident we will see a consistent growth in our net profit and returns on the coming quarters.

Let us now see the strategy for each of our business units as seen in the next 2 slides. We launched in 2019 BRL 2 billion of PSV, 77% of which was in São Paulo, 20% in Rio Grande do Sul and less than 3% in Rio. The gross margin for these launches have proven to be very healthy, 35% on average. However, this performance is not fully reflected on our results.

In São Paulo's business units, starting in 2016, we renovated Even's management model and we changed our strategy to purchase new plots. We have already launched BRL 2.3 billion of PSV in line with this new model for a total of 13 projects, which showed amazing results with an average gross margin of 33%, adjusting 19% margin for projects, more than 1 plots purchased before 2016 in the old model. This is regarding 2 land plots in São Paulo, for which we'll change the kind of product and probably we'll develop in partnership. 90% of the projects to be launched in São Paulo from 2021 are from plots already in the new business model and where we anticipate excellent margins and profitability. In Rio de Janeiro's business unit, we have already delivered 100% of the construction, and our focus is on selling finished inventory worth BRL 262 million. The margins in this inventory are low and contaminate the consolidated results, but they are important source of cash for the company. Our intention is to sell this inventory in the next 2 years.

In Rio Grande do Sul business unit, our brand is very strong, and our market share is over 35% in the middle and upper income segments. We've been increasing the volume of launches there and Rio Grande do Sul has been delivering stable and healthy margins, averaging 29%, even considering the challenging macro scenarios. Therefore, the improvement in the profitability in São Paulo, the gradual phasing out of Rio and a history of good results with a prospect for improvement and growth in Rio Grande do Sul business unit will lead to improving consolidated results in a consistent and solid way.

I would like now to give the floor to Leandro Melnick, Even's CEO.

[Leandro Melnick, executive]

Good afternoon. I would like to comment some -- 3 topics: our consolidated figures in our balance and our -- the strategy in the units and what we've been going through because of coronavirus.

First, we are very happy with the results in 2019. I understand it's a beginning of a sequence of good results that express a strategic planning that was implemented in the company starting 2016. In 2016, we developed our strategic planning for the company that aims at a company of high performance, high profitability in the medium long term. To reach this goal of high profitability, we split the strategy into 3 pillars: First, productivity. We understand that the company has to be very efficient in the G&A that's well adjusted to its volume. So we implemented a very significant work in reducing the administrative costs of the company, and we have a PSV to G&A of 2.8, to reach 6% in this indicator this year. And Rio de Janeiro is still presenting obviously some administrative costs. The company is efficient, lean. The management are in line with our strategic planning.

The other point was the increase in margin. Here, a reflection is in order. Our sector, our industry, has a margin in a strategic level over each SP. When we look at the consolidated figures, the margins are lower, and this happens for a few reasons. When there is a problem in an isolated SP, it brings down the consolidated margin of the company. So it's important to make a lot of wide moves and not make mistakes. So we have the following strategy. We only operate where we are very competent. We are operating in São Paulo and Rio Grande do Sul, places where the company historically has been showing very positive results. We do not have any pressure, internal pressure, in terms of volume of launches.

Our developments, our projects are in the sense of developing products with a highly added value that transfers to the client the perception that paying the sales price above the average of the industry. So we have been able to achieve this understanding in which the sales price has been surprisingly above the industry's average.

In São Paulo, we launched in these periods of 2016 to 2019, 13 projects with land plots that were acquired -- that had been acquired from 2016 on. In Rio Grande do Sul in the same period, the developments launched after 2016 with land plots acquired after 2016 are 18 projects. So the total is 31 projects. So 31 projects that present a very significant margin in São Paulo, 36%, and we're going to 29%. So this shows our strategy to work with projects that have added value, trying to decrease the number of launches that increase our average margin for these launches, and this has been presenting good levels. After that, we did some reengineering, some internal financial reengineering, to increase our ROE.

This strategy in the purchasing of land plots using swap operations and in a way in which -- where we don't have obligations of meeting prices or periods for launch and we have a lot of flexibility in these themes. The fact that we have been able to buy great plots makes the company increase its land bank in a very qualified way and also generating an expressive cash, BRL 912 million in this period and in a cash position of BRL 940 million gives us plenty of liquidity at this moment, and it's a result of this strategy.

The strategy also implemented to buy land through swaps. This is another advantage, which is to be able to plan the launches according to the market and not through the pressure of having to launch these projects. That is, today, we are in a condition to analyze the moment in the market, and for each project, to find and choose the project -- and to choose the project in a way that we do not have the pressures of launching when we buy certain land plots.

The consequence of following these 3 pillars, you can see in the company. The success of this new orientation, this new guidance, it puts us in a position that's very interesting for this moment we are going through this crisis of this epidemic. First, I would like to comment that the company is working with an eye to this subject and are taking all the precautions that are advised with the units in São Paulo, which are made in Porto Alegre. All the offices are working in a -- working from home. The work construction -- the construction sites are working with a series of measures together with the committee that was installed to be able to suggest the best prevention practices in Porto Alegre and Rio Grande do Sul. The construction is paralyzed in Rio de Janeiro. There, the construction is underway.

Our sales operations are active using digital model, using home office. It's been showing a good level of performance. But our circumstances today, that we have a good cash position and with a significant -- a qualified land bank without pressure of having to launch and a very lean team puts us in a moment in time, in a position that's very strong to face this crisis. We believe, we hope that this will go away as soon as possible. The situation will improve. And the company is prepared. We have been implementing a strategy actually for quite some time, which is planning to face any moment of adversity, to have a high cash, a lean structure, a high cash position and land bank that's not defined by the process of buying or spending cash on it.

To wrap up, look at our business units. As Carlos commented, we are very optimistic with the results for the coming quarters, for the coming months, for the analysis of the launches we have done from 2016 to 2019. In a group of projects, it shows the margin has been very positive. And our land bank shows very clearly that in São Paulo, our match launches are being aimed to reach this level of results in Rio de Janeiro. We are at a moment that -- in which we are not planning new launches. And in Rio Grande do Sul, our margin -- our average margin stabilized at a reasonable level for the moment of crisis we've been going through. And we understand in a future moment, when the market answers in a more positive way, we'll be able to respond, increasing our activities, analyzing unit by unit. It leads us to the conclusion that our figures for the coming quarters will be very positive.

These are my comments. So let's proceed to the questions and answers.

[Operator]

[Operator Instructions] Our first question comes from Gustavo Cambauva, BTG Pactual.

[Gustavo Cambauva, analyst]

I would like to ask in relation to the construction work in Porto Alegre, talk to us a little. Do you have any estimate regarding what the loss will be by the fact that the construction work is paralyzed and also not only Even but the whole chain, the contractors and everything? How do you see the breadth? How do you see the stamina of the contractors in terms of how they will survive this scenario of construction, paralyzed construction? And what is the prospect that the government has given you any kind of information about when we can return to operation?

[Leandro Melnick, executive]

So let me answer this question. Of course, there are some items that are very hard for us to estimate. Materializing an answer, this put in the city hall regarding our construction sites. The work has been paralyzed for almost a week, the productive chain. It has some possibility of keeping this going for 1 or 2 more weeks. We have a market share that's very relevant, more than 40% of the residential and commercial construction work in the city, and we work with all suppliers and contractors. And we have been following all the agreements between the labor union and the government.

In relation to deadlines and periods, estimated periods, we are very calm. Our engineering in the last years has been, in the sense, reducing costs on the construction site and having a very lean deadline. And this impacts our projects in a very positive way.

In relation to the city hall and the decree that is in place right now, there is work we have been doing, not just in civil engineering but the whole business, the whole -- we are trying to have a dialogue with the mayor and develop a model in which we can make it more flexible, some of the operations in order that we can serve our clients to give it some more flexibility.

So in a conclusive way, we are not overly concerned, given the deadlines and costs regarding our projects. We are worried about the productive chain because they are small companies, small contractors, and they will be more impacted. And we have been working in the sense of trying to convince the city hall to make it -- these new rules more flexible.

[Gustavo Cambauva, analyst]

Do you think the city hall will accept something similar to what's been happening in São Paulo? Do you believe it will be possible that the construction work will come back to operation?

[Leandro Melnick, executive]

I think this is our expectation. This is the most probable expectation, taking into consideration some of the indicators in the health department. São Paulo, the city of São Paulo, state of São Paulo, is also having this discussion. We believe, in the period of 1 to 2 weeks, the impact will not be very significant.

[Operator]

Our next question, André Mazini from Citibank.

[André Mazini, analyst]

My question is regarding negotiation of debts. Amortization BRL 227 million, some of it negotiated, more relevant in the future, that will impact cash. If you're going to use the cash really to -- or if you're going to be more aggressive or take more time on the negotiations with that? The finished inventory is at 40%. If it would be better to be more aggressive in relation to the finished inventory?

[José Carlos Filho, executive]

This is Carlos. As we commented in the call, we are very calm in relation to our cash position. Our cash position today is at BRL 950 million, and we have prepared to have some fluctuation. And we raised some capital, about BRL 30 million, and these negotiations happened in the beginning of the year. And besides, we are at a very happy moment of delivering projects. So our portfolio is very significant. The highest volume of deliveries was in last year. We have a portfolio that's about BRL 330 million. Adding up the 3 units, our portfolio is in the -- to the order of BRL 500 million.

Something important happened at the end of last week, where they guaranteed the working of the notary public and registers. So we are very calm because our cash position today in the company is at a very good, very robust level.

We have new financing lines. A little before the crisis intensified, we had a few session -- we had a portfolio with fiduciary elevation and to have a new discussion, a very robust discussion. And this will bring us some tranquility, which we understand as convenient.

Another point we didn't highlight, but with our customers' profile and the sales of our units, the volume of advances is very high, and we need very little financing to production. 2 weeks ago, we took a step to use this surplus in finance that we could have withdrawn but we didn't withdraw. So we still have a valid cash position. And this alone, for you to have an idea, for these things that have -- over the last 2 weeks, were BRL 80 million in the 2 business units, São Paulo and Rio Grande do Sul, which has 85%, and also Porto Alegre. So we are in a very privileged position in terms of cash in SP. We are in this portfolio session that we use within convenient. And our level of leverage is the lowest in our -- in the last 5 years. So we are safeguarded against these problems, and we are very calm to go through the next few months. I understand there are some restrictions regarding new clients and customers, but we are very tranquil about this.

[Operator]

Our next question, Marcelo Motta from JPMorgan.

[Marcelo Motta, analyst]

I would like you to comment how the first quarter this year until March was, all the problems we have been having, the speed of sales, how these things are performing in this first quarter of this year? If you could comment a little about the hotel, which now it's a little bit more difficult to sell, if this is already affecting, if some investors are coming?

[José Carlos Filho, executive]

Carlos speaking. Yesterday, we released a material effect showing the impacts and the measures Even is taking so we can go through this crisis. We hope that they will be short months, but the company is prepared.

In relation to sales, especially sales of inventory of new launches, we made the decision to postpone the launches a little bit and dedicate our efforts. And we have -- the industry has decided to close the sales stands. Any risk there is to have a crowd of people now, it's not a good idea. So we closed the sales line, and we are emphasizing sales online.

The sales are very solid. The past few months were very good months. But in fact, it has happened in the last 2 weeks of March with the sales of the remaining inventory. In the first 2.5 months, we had a good volume of sales. And we postponed -- this impacted the number of launches, but we are privileging the cash to be used in the new launches. So we understand that we can see, especially in the last week now in March, a very lower sale -- a much lower sales of inventory in spite of having us a lower volume sales. We are increasing sales online. We are using digital tools.

So within possible, we are working hard digitally to keep our sales levels up. We had an event in Rio Grande do Sul, which was an important event. And we managed in spite of the low attendance. We had a good result in sales and using all the online digital tools. We are reinforcing these tools in order to continue selling in this period. The idea is to understand the outlook of this first quarter in this year.

[Marcelo Motta, analyst]

And just to take advantage, in Rio de Janeiro in the presentation, when you say you have BRL 260 million of finished inventory, this is Even share or is it total?

[José Carlos Filho, executive]

Even shares are a little smaller, it's BRL 230 million. But in the Rio de Janeiro unit, the 2 projects, 100% Even as most financing to production have already been paid off in that region. As we sell the inventory, it's return to -- immediate cash return, and it's cash that is readily available for us to take advantage of.

[Marcelo Motta, analyst]

And the other question was about the hotel.

[José Carlos Filho, executive]

The hotel, we have 2 sales ongoing. One to ibis, and the other one, we are still working with Hotel Fasano because they are capital market operations at this moment. All these operations have been suspended. We expect a return in this window for these 2 operations, so we can take them to the market. We are still working in the company, that it is -- that it be 100% ready to when the opportunity comes back. A soon as operation -- it's in operation, we still have to work with -- domestically. So we cannot make an offer in the terms we were imagining now in April. So it will have less impact because we are preparing all the conditions to make a successful sales of the hotel. So we're going to have less impact. When it really opens, we'll be 100% prepared to keep the good conditions we have been negotiating. So this one was a little more advanced. This is a fund that is undergoing a process of follow-up. And for obvious reasons, we had to stop this process. But as soon as the market reopens, we are first in line to recover, to retake this offer. So there has been no immediate impact on the cash. But when the market comes back to normal operation, we'll take these 2 offers to the market again.

[Operator]

Our next question, [ Igor Alteris ] from Santander.

[Unknown Analyst]

I would like to understand a little how much the online sales represents of your total sales nowadays? And which are the main bottlenecks you see for the performance of sales online? The second question is in relation to transfers. How do you see the transfers happening in these moments of crisis?

[Leandro Melnick, executive]

Let me answer the first question. Thank you for the question, and then Carlos will complement. Online sales has been very significant. I cannot give you a percentage. I don't have this number, but the closing of the real estate operation happens with the visit from the client online or digital. It's our main vehicle to negotiate, and many times, we bid the projects. So we have been able to keep this activity at a very interesting level in terms of negotiation. And that's a reasonable number in terms of closing the deals, clients that already know the projects, and we're in process of negotiation.

Generally speaking, we see a performance that's a little more intense, a generation of closing deals. We have a deeper -- the clients have a deeper knowledge of the project. They have already visited the projects and the number of negotiations that we're undergoing in São Paulo that have been reverted to this online operations, and they have been happening at a reasonable level of closing. And we have been able to generate an interesting level of negotiations, and we organize ourselves for whenever possible, as soon as possible, we can close these deals.

For the next part, I will ask Carlos to answer.

[José Carlos Filho, executive]

In terms of transfer, in practice, the speed of transfers will certainly suffer. But São Paulo was operating partially. So serving our audience was 2 hours a day at this window. And we understand this window can be increased. We can serve clients with more speed. In São Paulo, they have been seeing our presence at closed doors. We are working on the contracts, the bureaucracy regarding the deeds. We are preparing everything in total -- we also restructured this way. So it's not happening, the physical exchange of documents. And of course, those, we receive these documents which the client send us, and then the transfer is made. The banks are working without any restrictions. The contracts, the financing contracts to our customers are happening.

In Porto Alegre, we have -- the monetary process was interrupted. But as I commented, there's an order of BRL 200 million to our transfer portfolio, which is very significant. The appetite from lines for the transfer is the same as before, the inflation plus 12%. So they want to do this financing process as soon as possible.

The digital means, the electronic signature of documents are working. We are signing documents digitally. We're transferring documents digitally. We have been able to operate. We expect the sales will decrease a little, but we expect that our portfolio of transfers will keep going. And this is a very important cash generation for the company. In spite of this crisis, it caught us in a moment that was good. It was not bad for us. We have a portfolio ought to be transferred [indiscernible]. Keeping in mind that last year, along the year, that Even has been delivering, as I commented, an aggregated volume of cash generation in the quarters. The work in reducing the cost of this debt, we paid off a lot of the financing to production. And now most of this -- the money from this transfer is free to be distributed as we agreed previously, the financing to production.

[Operator]

Our next question, Luis Stacchini from Crédit Suisse.

[Luis Stacchini, analyst]

Two questions, actually. The first, the follow-up on the previous question. The receipt from Even in the last 2 years is a little above BRL 400 million. In the current scenario, do you have an idea what kind of level of receipts you'll be able to maintain in the current scenario?

And regarding costs, what would be an overhead of fixed cost for Even on the construction side, launches, some fixed costs you have to lever the contractors?

And the third point is if you see any risk -- higher risk of cancellations? I mean for 2020, it will be much lower, but these deliveries, the moment of, say, the more deliveries are not happening in the same speed as it was, if you see any risk from now on?

[José Carlos Filho, executive]

Carlos here. Let me show you the breakdown, the entries of -- for this. Our entry of cash is increased. So the sale is already done, which is a daily work we're doing to control if the client starts defaulting or being delinquent. We have not seen an increase in delinquency from clients.

Second, the cash generation for last year, actually the last 2 years, it was based on sales of inventory and special sales of finished inventory. It's a great cash generator for the company, we believe. Along this period in which we are fine, I imagine the sales of inventory will suffer.

We expect a reduction in the sales of inventory, finished inventory, which is an important factor to generate cash. Keep in mind that as we delivered the projects, the cash that will not come from sales of inventory will be more than made up for the transfers, for the things that the projects we have been delivering. We have a very robust portfolio. And the banks still have an appetite for the transfers, and one thing will make up for the other.

Of course, internally, we work with different scenarios to understand the magnitude of this reduction of cash in the company, which may have -- which must happen, but we are absolutely calm. The sales of -- especially in finished inventory will reduce express, but it will be laid out for the increase in transfers. Even if cash generation, the consolidated, suffers, we are still well prepared to go through the next few months without any kind of problem. We are more than well prepared to deal with a scenario of -- we are pretty calm to go through this volume of a higher delinquency level.

In relation to costs, São Paulo, the work -- construction work continues. The contractors do not want to stop because they are the ones that are more interested in keeping it going, the cost of stopping and then restarting the work. In Porto Alegre, the period is very short, the period in which we interrupted construction. So it is still very difficult to measure the impact on costs.

What I can tell you now, we have been having savings in construction that we had adjusted the cost to our budget. So the cost -- our cost estimate, our cost budgets have been already done. So we are not reviewing these estimates. It depends on how long these prices will go on, then we'll have to make new provisions for costs in Porto Alegre's construction sites. We are measuring this practically every week.

In relation to cancellations, our profile, the profile of our portfolio is a profile we usually make, very strong, very high advanced. As a consequence of the quality of our projects, the fact that we have very good projects, Arbo in São Paulo, [indiscernible] in Porto Alegre, where we have a price that's -- it's different because of the quality of the product. So we are in condition to offer some attractive conditions for people who are willing to pay in full. So this, on average, the percentage paid to our clients is a very high percentage. And because of cancellations, which has been happening with us for a year, we do not see an increase in the risk for cancellations. On the other hand, we already have high cancellation levels, BRL 85 million. So we reversed part of this sometime in the past.

We have been successful in delivery and sales, part we -- was canceled, but part of this we resold. We reversed these cancellations. So we have a very conservative position in relation to this. What happened in practice is that recent sales, where the client had not generated the promise of buying, in this case, yes, we had an increase. Some of them decided to stop the process of buying. So the beginning of 2017, the end of 2018, we had some -- so even though we are not accounting for this, some customers yet ended up giving up and canceling, but the impact was minimal to the net sales, we imagine, but it's nothing significant. I don't know if I answered your questions.

So you see that the cancellations will happen more in the new sales than in the older sales. That's it. Yes, that's it. We understand that the customer that were going to give up, they have already given up. So we are going after new contracts and everything continues. Life continues. But after this coronavirus event, some that had not signed yet the commitment to purchase walked out of the deal.

[Operator]

We are closing this moment the Q&A session. I would like to give the floor back to Carlos for his final considerations.

Let me give the floor back to Leandro for the final considerations.

[Leandro Melnick, executive]

So we have to thank you all. And as we have shown, we have shown very relevant results in terms of costs. We have all been affected by this crisis but not by chance. It has been planned. We are very well structured for this moment we are going through. We have a high cash position, significant results in the projects. Our land bank is highly qualified and structured in this format of swapping. In this moment of volatility in the market, we are prepared. And we hope we will go through this moment of this coronavirus epidemic, and we hope that our work will yield the results.

And it's good to keep in mind that most of the governments that have been dealing with this virus is analyzing the civil construction industry. So it's important that the performance of the market as a whole, we will go back as this -- the market retakes its operations with even lower interest rates. We're going to have a positive environment to go back to having good results that we have been having. Thank you all.

[Operator]

Even's teleconference is 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.]