4Q08 Presentation

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4Q08 Presentation

  1. 1. 2008 Full Year and Fourth Quarter Results Earnings Conference Call Investor Relations Contact Julia Freitas Forbes ri@gafisa.com.br
  2. 2. Overview of 2008 and 4Q08 results - Wilson Amaral, CEO Financial and Operational Performance 2
  3. 3. Highlights of the Year Consolidated Launches including Tenda (12 months) increased 88% over 2007 Launches increased to R$4,196 million in 2008 from R$2,236 million in 2007 Pre-sales increased 58% y-o-y including Tenda (12 months) Pre-sales increased to R$2,578 million in 2008 from 1,627 million in 2007 Net Operating Revenues rose 45% y-o-y Net operating revenues increased to R$1,740 million in 2008 from R$1,204 million in 2007 2008 EBITDA reached R$221 million (12.7% EBITDA margin) a 61% increase y-o-y Net Income reached R$110 million, an increase of 20% from 2007 Backlog of results reached R$1,015 million in 4Q08, a 92% increase compared to the R$528 million in 4Q07 Land bank totaled R$17.8 billion, 75% growth over 2007 Gafisa completed 90 developments totaling R$1.2 billion during 2008 Gafisa consolidated presence in low income segment through Tenda, its 60% owned subsidiary 3
  4. 4. Highlights of the Quarter Consolidated launches decreased 28% over 4Q07 Launches decreased to R$747 million in 4Q08 from R$1,036 million in 4Q07 Pre-sales decreased 8% q-o-q Pre-sales decreased to R$607 million in 4Q08 from 662 million in 4Q07 Net Operating Revenues rose 64% q-o-q Net operating revenues increased to R$624 million in 4Q08 from R$381 million in 4Q07 4Q08 EBITDA reached R$34 million (5.4% EBITDA margin) a 6% decrease q-o-q Net loss was R$13 million in 4Q08 compared to a net profit of R$50 million in 4Q07 Gafisa completed 29 projects totaling 2,815 units and a sales value of R$440 million during 4Q08 4
  5. 5. Recent Developments Tenda consolidation completed: Gafisa’s financial statements consolidate 100% of Tenda results from October 21. Accounting changes bringing Brazilian GAAP closer to IFRS accounts receivable and accounts payable discounted at present value expensing of sales stand costs in up to one year Expensing of stock option plan establishment of a provision for warranty (technical assistance). Cancellations of Gafisa, Fit and Tenda launches Non-recurring items impacted fourth quarter Bairro Novo partnership with Odebrecht ended Moody's affirmed Gafisa's Ba2 local currency rating, but changed the outlook to negative from stable. Gafisa's national rating went to A1.br from Aa3.br. Gafisa’s local rating from Fitch went from A (bra) to A-(bra). 5
  6. 6. 2008 Launches Increased 88% to R$4.2 billion over 2007 Launches (R$ million) Including 12 months of Tenda New Markets Rio de Janeiro São Paulo 4,195 88% 1% 1,893 Gafisa 47% AlphaVille 2,236 Tenda Total 46% Bairro Novo 742 865 -28% 7% 1,036 747 562 1,437 1,036 931 747 4T07 4T08 2007 2008 6
  7. 7. 4Q08 Sales Increased 58% to R$ 2.6 billion over 2007 Pre-sales (R$ million) Including 12 months of Tenda New Markets Rio de Janeiro São Paulo 2,578 58% 1% 1,316 1,627 39% Gafisa AlphaVille Tenda 541 45% Total Bairro Novo 542 399 15% 662 -8% 607 662 686 720 607 4Q07 4Q08 2007 2008 7
  8. 8. One of the Most Geographically Diverse Homebuilders already present in 21 states 199 projects under construction in 20 different states *States where Gafisa or its subsidiaries already launched projects. 8
  9. 9. 51% of our inventory consists of developments launched but not started Our inventory totals R$4 billion at market value and R$1.3 billion at book value Up to 30% 30% to 70% Over 70% Not Started Completed Total Completed Completed Completed Gafisa 728,091 655,298 201,338 101,965 90,185 1,776,878 AlphaVille 8,548 78,578 34,716 46,725 46,453 215,020 Tenda Residencial 1,315,627 402,688 131,775 120,591 40,660 2,011,342 Bairro Novo 0 104 8,231 5,906 8,534 22,774 Total 2,052,266 1,136,668 376,060 275,187 185,832 4,026,014 9
  10. 10. Gafisa has a Diversified, High-Quality Land Bank, 72% Acquired through Swaps 247 different sites, all over the country. 115,000 potential units. Future Sales Potential Units Potential Units Swap Company %Gafisa 100% % Gafisa Agreements % (R$ MM) Gafisa 22,412 19,050 7,685 40% AlphaVille 32,122 16,432 3,031 97% Tenda 70,116 67,578 6,342 20% Bairro Novo 24,326 12,163 802 82% Total 148,976 115,224 17,843 72% 10
  11. 11. Projects worth R$1.2 billion completed in 2008 Gafisa completed 20 developments valued at R$704 million, AlphaVille 3 developments valued at R$150 million and Tenda 67 developments or phases valued at R$324 million. 11
  12. 12. Overview of 2008 and 4Q08 results Financial and Operational Performance – Duilio Calciolari, CFO 12
  13. 13. 4Q08 Results were Impacted by Non-Recurring Items 2008 Gross Profit Margin EBITDA Margin Net Income Margin Result Before Law 11638 533.2 30.7% 231.3 13.3% 141.6 8.2% Launches Cancellations 11.0 15.7 15.7 Restructuring 14.0 14.0 Result Before Law and Excluding 4Q Extraordinary Items 544.2 31.3% 261.0 15.0% 171.3 9.9% 4Q08 Gross Profit Margin EBITDA Margin Net Income Margin Result Before Law 11638 145.6 24.8% 35.9 6.1% 1.6 0.3% Launches Cancellations 11.0 15.7 15.7 Restructuring 14.0 14.0 SAP Implementation 25.6 25.6 25.6 Result Before Law and Excluding 4Q Extraordinary Items 182.2 31.0% 91.2 15.5% 56.9 9.7% - cancellation of projects with a weak sales performance - restructuring costs to adjust the company to the new economic scenario - SAP implementation caused some disturbance in operations, impacting results in the last quarter – in addition SAP-related costs should have been diluted during the year 13
  14. 14. Law 11,638 included changes to accounting standards for all companies in Brazil, bringing them closer to IFRS. There was a negative impact of R$ 31.7 million in 2008 net income, R$14.4 million refers to 4Q08: 2008 Before Law Law 11638 Reported Land Stock Warranty Stand NPV Other Total Swaps Options Provision Amortization Net Revenues 1,737.3 6.5 (3.3) - - - (0.1) 3.1 1,740.4 Total Cost of Goods Sold (1,204.1) (1.6) 5.8 - (5.1) - (9.4) (10.3) (1,214.4) Gross Profit 533.2 4.9 2.5 - (5.1) - (9.5) (7.2) 526.0 Gross Margin 30.7% 30.2% Selling Expenses (166.1) - - - - 13.1 (1.4) 11.7 (154.4) General & Administrative (155.3) - - (26.1) - - 0.8 (25.3) (180.6) Other Operating Result 19.5 - - - - - 10.4 10.4 29.8 EBITDA 231.3 4.9 2.5 (26.1) (5.1) 13.1 0.2 (10.4) 220.8 EBITDA Margin 13.3% 12.7% Depreciation and Amortization (19.6) - - - - (32.0) (1.0) (33.0) (52.6) Net Financial Results 39.8 - - - - - 2.1 2.1 41.8 Minority Interest (63.3) - - - - - 6.6 6.6 (56.7) Income Taxes (46.5) - 2.7 - - - 0.5 3.2 (43.4) Adjusted Net Income 141.6 4.9 5.2 (26.1) (5.1) (18.9) 8.3 (31.7) 109.9 Net Margin 8.2% 6.3% EPS 1.09 0.85 Stock Option Plans Fair value of the stock option is calculated at the grant date and allocated to results over the vesting period of the options, and does not reflect changes in fair value after the grant date. On December 31, 2008 the strike prices of the 2008 and 2007 plans were R$33.93 and R$39.95, respectively, while the stock’s market price was R$10.49. 14
  15. 15. FY2008 and 4Q08: Operating Highlights Net Revenues (R$ million) Gross Profit (R$ million) 544 16 33% 56% 45% 30% 182 28% 1,740 24% 526 64% 1,204 19% 34 336 624 125 149 381 0 4Q07 4Q08 2007 2008 4Q07 4Q08 2007 2008 Net Revenues Gross Profit Gross Margin EBITDA (R$ million) Adjusted Net Income (R$ million) 261 171 40 171 13% 13% 11% 61% 13% 62 91 8% 20% 5% 56 6% 221 -32% 57 92 110 137 50 56 0 50 34 -13 -2% 4Q07 4Q08 2007 2008 4Q07 4Q08 2007 2008 EBITDA EBITDA Margin Adjusted Net Income Adjusted Net Margin 15
  16. 16. Strong Pre-Sales Positively Impact Backlog R$ 1,015 million of results to be recognized (92% growth compared to 2007) 4Q08 3Q08 4Q07 4Q08 x 3Q08 4Q08 x 4Q07 Sales to be recognized—end of period 2,997 2,045.1 1,527.0 47% 96% Sales Tax – 3,65% (109) (75) (56) 47% 96% Net Sales 2,887.5 1,970.5 1,471.3 47% 96% Cost of units sold to be recognized - end of period (1,873) (1,259.9) (943.0) 49% 99% Backlog of Results to be recognized 1,014.6 710.6 528.3 43% 92% Backlog Margin - yet to be recognized 33.9% 34.7% 34.6% 16
  17. 17. Gafisa’s Operation 4T08 4T07 2008 2007 Selling Expenses (R$ MM) 63.6 28.7 154.4 69.8 G&A Expenses (R$ MM) 76.3 44.0 180.6 130.9 SG&A Expenses (R$ MM) 139.9 72.7 335.0 200.7 Selling Expenses / Revenues 10.2% 7.5% 8.9% 5.8% G&A Expenses / Revenues 12.2% 11.6% 10.4% 10.9% SG&A / Revenues 22.4% 19.1% 19.2% 16.7% Revenues R$MM 624.2 380.8 1,740.4 1,204.3 17
  18. 18. Gafisa’s Solid Financial Position R$606 million cash in addition to R$300 million in securitizable receivables. R$3.4 billion in construction finance lines of credit provided by all of the major banks: R$1,699 million signed contracts R$751 million contracts in process R$951 million additional availability 73% of our debt is long term R$ MM 4Q08 3Q08 4Q07 Total Debt 1,552 1,377 695 Cash and Cash Equivalents 606 790 517 Obligation to Investors 300 300 0 Net Debt & Obligation to Investors 1,246 887 178 Shareholder’s Equity 1,612 1,689 1,485 Total Capitalization 3,164 3,066 2,180 Net Debt & Obligation to Investors / 77.3% 52.5% 12.0% Equity 18
  19. 19. 0 20 40 60 80 Gafisa 0 100 200 300 400 500 600 Feb-06 Cyrela Mar-06 Rossi Apr-06 Jun-06 MRV Share Liquidity Jul-06 PDG Aug-06 Sep-06 Ag ra Oct-06 Te nda Nov-06 Dec-06 Inpa r Feb-07 Te cnisa Mar-07 Lopes Apr-07 May-07 CCDI Jun-07 Volume (R$ MM) Abyara Jul-07 Aug-07 Klabin Oct-07 Even Nov-07 Dec-07 Brascan Price Avg. daily volume from Feb 01 of 2008 - Feb 28 of 2009 (R$ MM) Jan-08 Invest T ur Feb-08 Mar-08 Rodob ens May-08 EZ Te c Jun-08 Jul-08 Trisul Aug-08 São Carlos Sep-08 NYSE Listing: Gafisa is the only Brazilian real estate company listed in the United States. JHSF Oct-08 HIGHEST TRADING VOLUME IN REAL ESTATE SECTOR Market Cap (R$ MM ) Nov-08 CR2 Jan-09 0 0 10 20 30 40 750 1,500 2,250 3,000 19
  20. 20. Outlook Given the current economic situation and the continued disruption in the credit markets, visibility on overall growth in the industry is limited. Despite these factors, we are optimistic that government actions including the additional R$3 billion in FGTS funds designated for financing within the construction industry, the stimulus program aimed at building one million houses by 2010, and the lowering of the Selic interest rate by the Central Bank will result in the increased availability of funds to support the growth of homebuilding. However, without all of the elements currently in place, we are not providing guidance in the short term. In 2009, we will continue to be very selective with our launches, conserve cash and increase our sales efforts towards our inventory. 20
  21. 21. 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. 21

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