Download - 1Q08 Presentation
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Villagio Panamby – Salvador (BA)Investor Relations Contact:Julia [email protected]
First Quarter 2008 ResultsEarnings Release and Supplemental Financial Information
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Overview of 1Q08 results - Wilson Amaral, CEO
Financial and Operational Performance
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Highlights of the Quarter
Consolidated Launches increased 91% over 1Q07Launches increased to R$578 million in 1Q08 from R$303 million in 1Q07
Pre-sales increased 97% q-o-qPre-sales increased to R$503 million in 1Q08 from R$255 million in 1Q07
Net Operating Revenues rose 42% q-o-qNet operating revenues increased to R$319 million in 1Q08 from R$224 million in 1Q07
1Q08 EBITDA reached R$51 million (15.9% EBITDA margin) a 51% increase q-o-q
Net Income increased to R$42 million in 1Q08, from the adjusted¹ net income of R$21 million in 1Q07
Launches in 2 new markets: João Pessoa in the state of Paraiba and São Bernardo in the state ofSão Paulo
Upgrade on Fitch corporate rating to A bra (stable outlook) from A- (A minus) bra
¹ Adjusted for follow on expenses
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Recent Developments
Fit sales reached R$80 million. Fit now has 11 developments in 6 metropolitan areas.
Successful launch in January of Horto - Villagio Panamby, located in Salvador, Bahia: 98% of units pre-sold.
Gafisa Vendas expands to the North East: Gafisa established Gafisa Vendasto shore up the performance of third party sales teams and ensure sales speed and excellence in the region.
Bairro Novo Cotia started construction this quarter for phases 1 and 2, launched in December 2007.
Conservative Accounting Practices: the Company began capitalizing interest cost from corporate debt.
Potential Financing Program: recently, the Company submitted an initial filing with the CVM for a potential R$1 billion debenture program. Currently, we are registering the first tranche, of R$200 million.
2,2 3,0
18,4
2,95,5
3,83,9
5,5
7,0
6,9
4,9
9,3
2003 2004 2005 2006 2007 1Q07 1Q08
Mortgages using resources from FGTSMortgages using resources from SBPE
5Sources: ABECIP, Central Bank of Brazil, CEF and FGV.
Mortgage Lending Expanding Rapidly
Strong growth in mortgage lending still does not meet pent-up demand
143158
168187
235 243
2003 2004 2005 2006 2007 1Q08
Saving Deposits (R$bn)
• FGTS funds can now be used to finance mortgages of up to R$ 245 thousand
• CEF increases mortgages tenors to 30 years.
Savings Accounts Outstanding Balance (R$ bn)
25,3
16,3
6,06,9
10,4
Housing Credit (R$ bn)
+57%
+51%
+15%
3%
36%
41%
63%90%
27%98%
-1%
+55%
CAGR (2003-2007): 43%
88%
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Increasing Commercial Mortgage Penetration
16%34%
64%30%
32%
20% 18%54%34%
16% 16%
66%
2005 2006 2007 1Q08Gafisa direct financing longer than 36 monthsGafisa direct financing up to delivery of keysMortgage Loans
Gafisa is benefiting from higher mortgage availability and is working with banks to develop innovative mortgage products
Pre Sales financed by Gafisa vs financed by Banks
Reduction in accounts receivables duration, improves Gafisa’s working capitalHigher returns Higher asset turnoverImproving terms for clients with lower rates and longer payment periods
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Delivering on Growth Strategy: Strong LaunchesLaunches (R$ million)
85%
10% 5%
Gafisa
AlphaVille
Fit Residencial
93
252
108
218
151
60
1Q07 1Q08
New Markets
Rio de Janeiro
São Paulo
303
578
91%
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Delivering on Growth Strategy: Strong Pre-salesPre-sales (R$ million)
129195
78
230
73
52
1Q07 1Q08
New Markets
Rio de Janeiro
São Paulo
255
503
97%
72%
11%
16% 1%
GafisaAlphaVilleFit ResidencialBairro Novo
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127 projects under development
One of the Most Geographically Diverse Homebuilder already present in 18 states
Riviera de Ponta Negra – Manaus (AM)
*States in which Gafisa or its subsidiaries already launched projects.
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Gafisa has a Diversified, High-Quality Land Bank144 different sites, all over the country
Company Potential Units 100%
Potential Units% Gafisa
Future Sales%Gafisa(R$ bn)
Swap Agreements %
Gafisa 26,466 19,163 6,122 45%
AlphaVille 34,612 16,342 2,998 98%
Fit Residencial 17,203 13,382 1,401 7%
Bairro Novo 19,807 9,904 615 78%
Total 98,088 58,791 11,136 81%
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Our Product Lines: Focused Management Teams for Each Market
Mid, Mid High and High
Vertical
Metropolitan areas
Financing: Banks
Unique Projects
Unit Prices: > R$200K
60% owned by Gafisa
Mid High and High
Horizontal (lots)
Outside Metropolitan areas
Financing: direct
Unique Projects
Unit prices: R$70K –R$500K
100% Gafisa
Affordable Entry Level
Vertical
Metropolitan Areas and Outskirts
Financing: CEF and Banks
Standardized Projects
Unit Prices: R$80K –R$200K
50/50 JV with Odebrecht
Low Affordable Entry Level
Horizontal / Vertical
Metropolitan areas and Outskirts
Financing: CEF and Banks
Standardized Projects
Unit Prices: < R$100K
Own sales force
In São Paulo, Rio de Janeiro and Northeast
Selling Machine
Management of Channels & CRM
Management of Outsourced & Local SC
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Our Differentials
ProfessionalManagement
and Established Organization World-class
Shareholdersand the Highest
Standards of Corporate
Governance
Growth Through Product
Diversification
Industry Leadership and Strong Brand Recognition
Geographic Diversification
Supported by Strategic Land Bank
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Financial and Operational Performance – Duilio Calciolari, CFO
Overview of 1Q08 results
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Interest Capitalization
Targeting the best accounting practices, in 4Q07 we began to capitalize interest cost from corporate debt….
…. now we recognize it on a Percentage of Completion basis on COGS
21,03734,914Properties for Sale (Current Assets)
0.110.030.030.020.020.07Earnings per share (R$)
13,8733,8723,9473,1282,9259,159Net Income
(7,146)(1,995)(2,034)(1,611)(1,507)(4,718)Income Taxes
32,5549,0879,2647,3396,86516,626Financial Expenses
(11,535)(3,220)(3,283)(2,600)(2,433)(2,749)COGS
20074Q073Q072Q071Q071Q08
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1Q08: Operating Highlights
10766
33.5%
29.2%
1Q07 1Q08
Gross Profit Gross Margin
5134
15.9%15.1%
1Q07 1Q08
Adjusted EBITDA Adjusted EBITDA Margin
Net Revenues (R$ million) Gross Profit (R$ million)
Adjusted EBITDA¹ (R$ million)
224319
1Q07 1Q08
Net Revenues
42%
63%
51%
Adjusted Net Income¹ (R$ million)
4221
13.0%
9.2%
1Q07 1Q08
Adjusted Net Income Adjusted Net Margin
103%
¹ Adjusted for Follow on expenses
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Strong Pre-Sales Positively Impact BacklogR$665 million of results to be recognized (79% growth compared to 1Q07)
30bps80bps37.7%38.2%38.5%Backlog Margin - yet to be recognized
14.0%78.9%371.9583.4665.2Backlog of Results to be recognized
12.5%72.8%(613.8)(943.2)(1,060.7)Cost of units sold to be recognized - end of period
13.1%75.1%985.71,526.61,725.9Sales to be recognized—end of period
1Q08 x 4Q071Q08 x 1Q071Q074Q071Q08
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Current Revenues Come From Previous Years’ Sales88% of the 1Q08 sales come from projects launched after 2007….
… but only 37% of the 1Q08 revenues come from those projects
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109
026
70
130
64
0
33
120
75
0
88
204
31
15
237
0
100
200
300
400
500
1Q07 Pre-Sales 1Q07 Revenues 1Q08 Pre-Sales 1Q08 Revenues
Launched up to 2004 Launched in 2005 Launched in 2006 Launched in 2007 Launched in 2008
87.7%28.4%
87.8%37.3%255
224
502
319
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Gafisa’s Operation is Highly Efficient
SG&A over launches and sales begins to be diluted…
…Gafisa adopts one of the most conservative accounting practices in the industry
14.0%17.6%SG&A / Revenues
8.7%10.1%G&A Expenses / Revenues
5.4%7.5%Selling Expenses / Revenues
12.4%11.2%SG&A / Sales
7.7%6.4%G&A Expenses / Sales
4.7%4.8%Selling Expenses / Sales
10.4%9.7%SG&A / Launches
6.4%5.6%G&A Expenses / Launches
4.0%4.2%Selling Expenses / Launches
31,49056,197SG&A Expenses
19,48432,150G&A Expenses
12,00624,047Selling Expenses
1Q071Q08SG&A expenses
2.5%3.5%Deferred Selling Expenses / LTM Revenues
1.7%2.4%Deferred Selling Expenses / LTM Sales
1.7%1.8%Deferred Selling Expenses / LTM Launches
18,97244,633Deferred Selling Expenses (R$ 000)
1Q071Q08Deferred selling expenses1
¹ Current assets account
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Strong Financial PositionGafisa is prepared to deliver on its aggressive growth strategy, with only 23% of net debt to equity ratio…
… over R$200 million of receivables of completed units which is available for securitization anytime
11.4%(18.6%)23.4%Net Debt / Equity
2,220 1,780 2,664 Total Capitalization
1,531 1,424 1,573 Shareholder’s Equity
175 (265)369 Net Debt (Net Cash)
514 621 722 Cash and Cash Equivalents
689 356 1,091 Total Debt
621 299 1,006 Long Term Debt
69 56 85 Short Term Debt
4Q07 1Q071Q08
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Our Shares
NYSE Listing: Gafisa is the only Brazilian Homebuilder to have an ADR program
Stock has highest trading volume of any company in real estate sector
Stock performanceSince IPO: 97% from R$18.50 to R$36.49 (Apr 30, 2008)
Since Follow on: 40% from R$26.00 to R$36.49 (Apr 30 2008)
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Avg. daily equity turnover from Jan - Abr.08 (R$ MM) Market Cap (R$ MM )
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6
Jul-0
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Oct-0
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Mar-0
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0510152025303540Volume (R$ MM) Price (R$)
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Outlook for 2008
Launch guidance for 2008 of R$3.0 billionR$ 2.0 billion from Gafisa’s core business
R$ 700 million from Fit Residencial and Bairro NovoR$ 300 million from AlphaVille
EBITDA margin guidance of 16-17% for 2008
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“Safe-Harbor” Statement
We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements include statements regarding our intent, belief or current expectations or that of our directors or executive officers.
Forward-looking statements also include information concerning our possible or assumed future results of operations, as well as statements preceded by, followed by, or that include the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict.