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Good morning, one and all, and welcome to EZTEC's results presentation for the first quarter of 2021. Please note that this call is being recorded. [Operator Instructions] In case you may need any assistance over the call, please let us know through the chat box. In case you have any connection issues, you may reuse the same web link or ID to return to the presentation available on our website. You may find that link and ID as well as the slides for this presentation on the address, ir.eztec.com.br.
Before we start, we'd like to mention that any statements during this call that pertain to EZTEC's business projections, operational and financial partners are based on management's beliefs and premises as well as some currently available information. Future considerations do not constitute an assurance of performance. They involve risks, uncertainties and premises. Investors may take into account that general economic commissions, industry or operational circumstances may ultimately affect EZTEC's future performance. They may cause the company's results to differ materially from those expressed in those forward statements.
Now I'm accompanied by Emilio Fugazza, our Chief Financial Officer and Investor Relations Officer. I'll get the presentation started and pass it on to Emilio as soon as we get to the financial portion.
Now moving on to the first slide. Just very briefly introducing the main figures, new numbers that we'll try to address more thoroughly through the course of the presentation. Operationally, the quarter was marked by net sales of BRL 236 million; launches significantly lower at BRL 28 million, a single project; landbank of BRL 14.1 billion with many acquisitions for the year. Financially, we had a gross profit of BRL 83 million accounting by a gross margin of 42.5%. Our net income was BRL 73 million with a net margin of 37%, assisted by financial revenues.
Net cash of BRL 1.60 billion alongside BRL 529 million of performed receivables, much of that financed directly through -- by EZTEC and the portfolio of direct receivables of BRL 482 million. Here, we're talking about financing for the clients made through statutory lien agreements directly from EZTEC to the final consumer.
Briefly mentioned subsequent events that have happened already by the second quarter. We have yet another launch of BRL 253 million. It was Dream View launched as soon as sale stands were reopened. In our shareholders meeting of the end of April, we have also approved the payment of dividends of about BRL 96.2 million, about BRL 0.42 per share. And as an increment of the company's government standard, we had appointed -- we had an election of our Board of Directors with 4 independent members out of a whole total of 9 members altogether.
Now getting us started in each specific theme, addressing the EZTEC's landbank, it's important to mention that despite the quarter in itself does not have very many acquisitions, you noticed BRL 340 million of new acquisitions in the quarter. We have been coming from a full year of 2020, in which we had several acquisitions, basically fulfilling the full mandate that was given to EZTEC by a follow-on, at which time we had approximately BRL 940 million of cash injected in the company. And basically, about BRL 1 billion was already earmarked for acquisitions. Much of that was already deployed. Some of it is still pending installments, but that money has been directed to landbank that's already within EZTEC's landbank.
In the first quarter, specifically, we noticed that there was a significant contribution coming from price revisions. We're talking about something -- an average of 14% growth in price levels in our landbank alongside basically aligned with actual price growth for practice sales through the quarter. As you consider that we also have BRL 2.3 billion option acquisitions, you reached a combined landbank of BRL 14.1 billion by -- as we speak.
Just to keep that in proportion, out of that BRL 14.1 billion, have approximately BRL 3.4 billion, which is within EZ Inc, our commercial development company subsidiary. While the remaining BRL 10.7 billion is within EZTEC's residential operation that basically represents something like 4.3x, a sustained launch in volume of BRL 2.5 billion, which I said that there's plenty of landbank available at this time already. Somewhat signaling to a cycle a few years from which we do not need -- we don't have the imperative need to buy additional landbank. And we may keep on acquiring just to the extent that we actually push forward new launches.
Now moving on to the operational slide. Here's what -- here's where we see the direct effect of the toll that the pandemic has taken on EZTEC's performance for the past quarters. Especially when you look at the fact that approvals for new launches coming from the city hall, they have been lagging relative to what we wish for, which means that launches have been significantly lower over the course of the year thus far. Naturally, that has its own implications as far as the sales that were derived from those launches. But the sales themselves were also harmed in the first quarter by the fact that about 45 days out of the full quarter were marked by the red phase of the pandemic here in state of São Paulo.
The red phase of the pandemic means that all sale stands were forced shut over the course of 45 days. That had a particular effect on ready inventory units, considering that a client very naturally would prefer to visit the unit that he'll live in prior to making the investment decision, actually had a lot of clients that chose to postpone the investment decision in light of the ready inventory units about 30% lower than previous quarter and actually, that in itself has its implications in terms of revenue recognition.
Regardless, as you -- as soon as sale stands reopen, what we had seen, thus far, in approximately 3 weeks is that sales speed at this time is 26% faster than the average weekly sales speed for the fourth quarter of 2020. We're basically talking about a level of BRL 31 million sales per week, the growth is per week.
And just quickly mentioning about cancellations, here we have a smooth convergence to a BRL 20 million standard of cancellations closed formally. And it's very important to remind you that out of those BRL 23 million cancellations in the quarter, 44% actually refers to transfers or upgrades and downgrades where our credit recovery team tried to redirect a client to another unit as a way to prevent cancellation and that may mutually be an advantageous way for both the company and the clients. That takes us to a net sale of BRL 236 million in the first quarter of 2020.
Now moving on to the next slide, we will talk about the outstanding inventory for EZTEC. What you'll notice is that altogether, we're standing at BRL 1.66 billion of available inventory at this time. You noticed that we had some 300 commercial units, but mostly, we're talking about residential units within the state of São Paulo. There has been a marginal decrease in the inventory side in comparison to the fourth quarter as a consequence of the fact that we do not have enough launches to replenish the volume of net sales we had. That takes us to a point in which we have the lowest inventory level for the past 7 years, especially when you looked at -- and within that inventory you'll also notice that the ready inventory in itself is shrinking. The largest concentration we have is still in Cidade Maia and the city of Guarulhos, where we have BRL 435 million available inventory. Cidade Maia always a good reminder, is still selling in this quarter at a gross margin of 49%. So that's a very strong contribution here for EZTEC's operation, and it's been so for the past 3 quarters already.
Naturally, we do not have very many deliveries over the course of the past 2 years as we come to the fact that we also did not have very many launches over the course of 2015 all the way to 2018. But those deliveries should pick up back again by the second half of 2021 and on. We're talking about some BRL 500 million of PSV to be delivered in the second half of 2021. So that should contribute with a larger portfolio of units available for EZTEC's commercial assets.
Now moving on to Slide -- the -- this Slide #7, where we talk about launches. Like we said, launches for the first quarter in itself, we're only the single power launch in ID Paraíso, that's BRL 28 million in PSV. It's actually combined -- it's a project that is combined with a previous launch called Signature By Ott. And if you take it all together, it's at this point, it has 60% of this area already sold. The ID Paraíso very much driven towards investors. ID Paraíso was launched at a time in which we do not have -- we don't have our sale stand open. But given that it is a relatively small project, and investors tend to be a little more nimble in terms of being able to access digitally, that worked out fine for EZTEC. And as soon as sale stands reopen by the 18 of April, we also launched the Dream View Vila Prudente project that happens as a subsequent event, adding another BRL 253 million of PSV to the quarter.
Now moving on to our next launches incoming, Slide #8. It's very important to highlight EZ Infinity. EZ Infinity is the main project for the coming months. And it's also possibly the highlight for income -- for high-income projects to be launched in São Paulo for the year as a whole. We're talking about something that could reach BRL 600 million of PSV by the time it is launched. It is the -- and just for reference, it is a project on -- to be built on top of IBM's current parking lot by the Paraíso region, a region where it's very hard to replenish landbank, very valuable asset and a launch for the coming months.
Other than that, we also had Arkadio and Altta Vista. They are a smart-living and high-income project for the Chácara Santo Antônio region of São Paulo, for the -- that's still pending approval to be launched, but also hopefully a launch for the coming months. And that will bring an additional -- if you take those 3 projects combined, that basically represents on BRL 1.1 billion of launches already in the coming months out of the guidance of -- the 2-year guidance of BRL 4 billion to BRL 4.5 billion that we had committed to basically where we're still left with an additional BRL 2.6 billion to BRL 3.1 billion of guidance still pending for the remainder of 2021.
With that said, I'll pass the word to Emilio, our CFO and Investor Relations Officer, to comment on financial performance.
Thanks, Hugo.
Let's talk about financial performance, Slide #9, starting with net revenues coming at BRL 195 million in first Q 2021, coming down from BRL 262 million in the fourth quarter 2020. It's important to bear in mind that the pace of the construction nowadays is becoming a little bit slow compared to the third and fourth quarter of 2020, specifically because of the problems regarding the sanitary conditions, the COVID issues here in Brazil, specifically between February and in March.
It's important to understand how can we come up with those revenues. Once we can sell 1 unit, the whole unit, obviously, we are going to recognize it as the growth revenues coming from these units. But units under construction are units already launched. We are going to recognize only the stake of the land of the revenues and the construction part is going to take place in the midst of the construction. So we are going to recognize by the percentage of completion method, the revenues of the quarter. The problem is given the fact that we sold less portfolio units in the first Q and the pace of the construction sites were lower than in the past, we came up with less revenues than in the past.
From now on, we do expect that the volume of construction can increase a little bit in the second quarter, but mainly in the third quarter of 2020, given the incremental prices we have been facing so far. And obviously, the situation about the pandemic, given the [ specific restrictions ] in São Paulo.
Talking about gross profit on the chart, at the top right of this slide, you can see BRL 83 million of gross profit before. And gross margin of 42%, recovering a little bit from the fourth quarter 2020 from 40%. That's important -- it's important to say that the INCC index, which is adjusting all the receivables we've got in the -- in our balance sheet can so far replace the increment in costs we are facing now. It's important to understand that we have been facing a lot of increment in costs, especially of raw materials like concrete, like steel, specifically copper. So far, those increment in costs or delays in the construction sites are not harming the schedule of delivery at those construction sites. And so far, the costs and the margin are remaining a little bit steady over a little bit more than 40%.
Talking about selling expenses. Selling expenses nowadays are coming at a base of 4% of gross sales. That's important to mention. When you see -- when you look deeply at the figures, you can understand that we are coming up with a lot of new sale stands to launch the projects as Hugo told you before. Apart from that, you can see an increment at branch of a ready inventory, commission and others. Specifically commission because nowadays totally different than the past, all the commissions are recognized over the selling expenses because many of the sales are coming to digital ways. So digital ways means that the brokers are not charging for the commissions directly to the clients, but also trying to do that directly to the company, and that's a way to perform sales a little bit faster in this moment we have been through.
In terms of G&A, specifically you can see BRL 25 million for first Q 2021 compared to BRL 27 million 1 year ago. That's because we made a lot of adjustments in the second Q of 2020 and third Q. Those adjustments in payrolls are even adjusting the whole teams of EZTEC in the headquarters. And we have recovered the number of people we actually [ saw ] before in our company. That's why we can see a little bit less expense -- G&A expenses than in the past.
Apart from that, it's important to mention that if you are going to look deeply at the -- at expenses of the company, tax expenses were a little bit higher than in the past. That's because of every first quarter, each year, we can pay in advance the whole land and property taxes to the municipality. And this year, only land has impacted something around BRL 12 million, counting on the part of the land managed by EZTEC or in partnership with the other developers. And that's why we saw an increment on this branch.
Moving on to financial performance 2 on Page #10. You can see on top left, BRL 45 million coming in the first Q 2021. Let me remind you that it's totally because of the performed assets we have here holding on our accounts. Nowadays it's about 1,500 units we have been providing financing to them adjusted by IGP plus 10% nearly. Only to bear in mind, only to understand what happened here in Brazil, IGP was since the -- January 2020, adjusted by something around 35%. And quarter-by-quarter is impacting our receivables on this branch.
If you look deeply at financial expenses, it's important to understand that since fourth quarter 2020, fourth quarter and first quarter 2021, you can see a huge increment in financial expenses. It's not regarding debt because we have no holding debt in our company. But mainly, given the questions I got from the Q&A in Portuguese, an hour ago, it's important to understand that, that's because -- mainly because of 3 factors.
First of all, because many people are paying advance installments that they were going to pay only after the permits of living. So these payments in advance are accounted with some sort of discounts. Secondly, because in the fourth quarter, we have the [ leading permits ] for one specific project in advance. This project was active the Cotovia. And -- but we only deliver the units to our clients between March and April.
And we have decided about these specific projects. Instead of charging IGP plus 12%, it was so high for this specifically -- for this specific project. We have targeted only INCC. So was a huge difference because INCC on this specific time was something around 3% yearly. And IGP plus 10%, IGP plus 12% was more than 6%. So the difference between one and another made an adjustment of financial expense reported in those quarters.
And finally, only to understand, so when we sell 1 unit, after we sell this unit, the client has 3 to 4 months to get the mortgages from the banks. But in between, the client has -- it's stats -- his stats adjusted by IGP plus 12%. And in majority of the cases, because of the units are performed, because of the units are in the mid-income segment, it's barely possible to have this amount of adjustments only within 2 to 3 to 4 months. And we provide a discount to them. And this discount, mainly you can see 0.5% of this adjustment of IGP, for instance. And that's why in the last 2 quarters, we saw -- we went in an incremental financial expense.
Moving on to equity income. Our equity income is about BRL 6 million in the first quarter 2021, mainly impacted also because of the property tax, something around BRL 4 million to BRL 5 million over this line. Obviously, we don't expect less than that in the -- less than that month of results in the next coming quarters, specifically because many of the enterprises coming from this branch are starting to -- are starting the constructions and all pattern in the pace of the construction overall.
In terms of net income, net income came at BRL 73 million and a net margin of 37%. And so -- and obviously, 6% of it impacted by financial results. We do expect that we are going to see a higher increment in revenue recognition in order to boost the volume of net income coming in the coming quarters. And finally, that, I would say, could be the highlights of these first quarter results, first quarter 2021 results. It's the backlog margin around 45%. Around 45% means that all the adjustments we got in the budget of the constructions or in the accounts because of the construction have not impacted so far the margins to be recognized in the coming quarters from the sold units so far. That's very important to say.
So the main idea, the true mindset behind this can be the fact that all the incremental costs we have been facing can be offset by the adjustments of the INCC so far.
On Page #11, you can understand a little bit more deeply the portfolio of performed units sold with financing provided by EZTEC. So for first Q, there is something around BRL 480 million, meaning something around 1,500 units under management for EZTEC. Important to see the payments in advance we have already received something around BRL 66 million this quarter, meaning that 182 units paid that off specifically trying to transferring -- trying to transfer the credits to the banks, taking mortgages from the banks. This is highly possible right now because many clients that took finance from EZTEC 5 to 6 years ago, now they have a loan-to-value of 60% or 50%. Nowadays, those credits for them are available in a very interesting -- in a very good interest rate, something around 5% to 6% yearly compared to IGP plus 10%.
The highlight of this slide is about the foreclosure, only 12 units. Let me remind you, that's for the whole assets managed by EZTEC in terms of performed portfolio, only 100 to 110 units are on the fall right now. We have been managing, obviously, you can expect something around 60 to 70 units to be taking back in the next coming quarters. So the foreclosure can reach something around 60 to 70 units in the whole year. So meaning that it's about 4% of the total amount of units, which is not a concern by itself.
On Page #12, financial performance Fit Casa, our brand for Minha Casa, these are low-income segments. It's important to understand that we haven't reached something around 50% gross margin on the -- on Fit Casa, meaning something around BRL 8 million of net income in this segment. Let me remind you that BRL 8 million is already impacted by the tax property or land taxes we have paid in advance to pursue more than BRL 5 million. Even with the huge impact in the first quarter, we could provide something around 10% return on equity. So you can expect a return on equity even higher for the next coming quarters because as Marcelo Zarzur, our Technical Director and current CEO, EZTEC CEO, said in the conference call in Portuguese 2 projects scheduled to be delivered by the end of this year or half of 2022 are going to be delivered in advance -- 6 months in advance and with some savings in budgets. We can provide an increment in the net profit and also in the gross margin of Fit Casa as well.
So saying that, let me bring to the end of this presentation, in Slide #13, talking about [ other asset, our ] common assets in this company. First Q ended up with BRL 4.1 billion shareholders' equity, which can -- we can break up into cash and equivalents of almost BRL 1.1 billion. Finished unit receivables of BRL 529 million. And the cost of the landbank, the landbank of BRL 11 billion has already booked it by BRL 1.2 billion, almost BRL 1.2 billion, but we have to increase here another BRL 3 billion. We are going to do that in the next coming quarters. And it's going to add by something around BRL 300 million to BRL 400 million the landbank inventory. In terms of liabilities, only to remind you that the dividends we are going to pay in the next coming quarter or next coming quarters of BRL 96 million. And they're only carrying something around BRL 8 million of construction finance, almost nothing regarding the BRL 4.1 billion shareholders' equity.
All in all, that's our earnings for the first Q 2021, and we are really open to -- for the questions you may have. Thank you very much. Thank you for our audience today.
Hello? Can you hear me?
Yes, we can hear you. Who is this? Is this -- I cannot really see your -- who's exactly speaking.
Oh, this -- oh, sorry. This is Nicole Inui from Bank of America.
Nicole, thank you for your questions. There you go. Sorry for the disconnection.
No, no. No problem at all. Just a couple of questions. First, on launches. How are you thinking about your guidance for this year? We've had a difficult start of the year. We had another shutdown. We are already in -- reaching the end of May. So how strongly do you feel that you'll be able to meet this guidance for the year? And if not, how do you think it will look in terms of launches for the year given the recent lockdowns that we had? And then the other question is just in terms of your pace of construction, it's been slower this quarter. I saw some specific problems with [ parking, investing, that is ]. So if you can elaborate a little bit more on that, it'd be great.
Nicole, thank you very much for the questions, very good morning to you. Regarding launches, specifically, let me say what Silvio Zarzur and Flavio Zarzur has already mentioned in the Portuguese call right now. In terms of launches, so obviously, we are fully committed to achieve the guidance. But obviously, we have already missed something around 45 days in terms of launching process. So regarding the permits, specifically since the beginning of March, we haven't saw a huge work coming from the Municipality, specifically the Municipality of São Paulo releasing the permits.
Hugo had already mentioned about the 3 major projects we're going to see in a couple -- in the months coming, specifically in terms of IBM, Arkadio and Altta Vista. All in all, we are talking about BRL 1.2 billion. Adding the 2 projects we have already launched, which means something around BRL 300 million, it's meaning that up to July, so beginning of July, we can reach something around BRL 1.5 million of launches in the first half 2021.
So there are something around 50 more projects under the process of taking licenses, taking permits. And regarding what Mr. Flavio has said, so he is fully committed to get the license for those projects up to the end of this year. So in order to achieve the guidance at the end of this year. But obviously, in terms of getting capacity enough, operational capacity enough to open the sale stands to making the sales of those projects, also in 2020, can be a little bit hard. So it's possible to see the launches coming at 80% of the guidance, something about that up to the end of this year and watching the remaining projects being accomplished by January or February. All in all, depends on not having another stop, another closing of the sale stands, again, in the next couple of months.
So let me bring in to making a long story short. We are pretty committed to achieve the guidance. But obviously, we already know that we have already missed something around 2 months so far. In terms of pace of construction, it's important to understand that what we have been facing now, it's not something that is harming the schedule of delivering the projects, that's important. All the products we are going to deliver in 2021 are going to be delivered on the schedule and with all costs are even facing some savings on those costs.
But projects with very large proportions like -- such as Parque da Cidade we have already mentioned in the earnings release or even though Air Brooklin, for instance, are projects that are at the beginning, the cost of the constructions are getting higher and higher, specifically of the raw materials. And we are facing, obviously, some delays because hiring people to work on those projects.
Saying that, I would like to address that everything about 2021 are not harder. But 2022, I will say that we are going to -- strong enough to achieve the goals. So we don't expect an -- enhancements in the pace of the construction in the second quarter as we are in the middle of it. We are -- we do expect something coming from the third quarter 2021, Nicole.
Thank you very much, Nicole.
And with that, our conference call for the results presentation is over. We thank you all for your attention. And we remain available or the Investor Relations team for any further questions at any time. Have a nice day.