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Apresentação institucional 11 2017 eng

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Apresentação institucional 11 2017 eng

  1. 1. MRV ENGENHARIA E PARTICIPAÇÕES S.A. Corporate Presentation
  2. 2. Disclaimer The material that follows is a presentation of general background information about MRV Engenharia e Participações S.A. and its subsidiaries (collectively, “MRV” or the “Company”) as of the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information. This presentation may contain certain forward-looking statements and information relating to MRV that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “believe,” “anticipate,” “expect,” “envisages,” “will likely result,” or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. In no event, neither the Company nor any of its affiliates, directors, officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages. This presentation does not constitute an offer, or invitation, or solicitation of an offer to purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. The market and competitive position data, including market forecasts, used throughout this presentation was obtained from internal surveys, market research, publicly available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or other publications. MRV does not make any representation as to the accuracy of such information. This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MRV’s prior written consent. 2
  3. 3. 3 MRV at a glance ▪ Leading homebuilder in Latin America with over 365,000 units sold ▪ 38 years of history with presence in all Brazilian key markets ▪ National footprint: presence in 148 cities and 22 states in Brazil ▪ MRV is listed under “Novo Mercado”, the highest corporate governance level ▪ MRVE3 is part of 15 Brazilian stock indexes (B3) ▪ Market cap of R$ 5.7 billion (US$ 1.7 billon*) ▪ MRVE3 average trading volume at B3: R$ 47 million (3Q17) ▪ The most liquid ADTV among Brazilian homebuilders ▪ Standardized operation aiming high efficient and productivity ▪ 5 years of recurrent cash generation ▪ Continuous innovation to support sustainable and profitable growth ▪ Over 22 thousand employees across the country * (11/13/2017: US$ 1 = R$ 3,287)
  4. 4. Strong Corporate Governance • Risk and Compliance • Governance, Ethics and Sustainability • Human Resources • Commercial and Credit • Real Estate Financing • Production • Communication • Legal • Founder and controlling shareholder with a long term vision • Growth and sustainability interests are aligned with minority shareholders ✓ MRV is listed under “Novo Mercado”, the highest corporate governance level ✓ Benchmark in Sustainability: only homebuilder included in B3 Sustainability Index (ISE) ✓ Board of Directors composed by 7 members (4 independents) ✓ Executives interests in line with our shareholders through long term Stock Option Plan ✓ Free float represents 64,7% of shareholder’s equity Communication Chanel: • Shareholders' recommendations: assembleia@mrv.com.br • Confidential Channel: https://canalconfidencial.com.br/mrv/ 59.6% • Other Shareholders 33.0% • Rubens Menin T. de Souza 5.1% • Prudential Plc. 1.8% • Executives and Board Members 0.5% • Treasury shares EXECUTIVE COMMITTEES Shareholders Structure 4
  5. 5. NET SALES CAGR 2008 - 2016 NET REVENUE CAGR 2008 - 2016 Source: Companies' Financial reports. Brazilian peers: Gafisa, Tenda, Rossi, Tecnisa, Cyrela, Even, Ezetc, Direcional, Helbor, Rodobens Expressive sales and net revenue growth 5
  6. 6. Leadership in the low income segment Market share Geographic diversification provide us a unique position compared to our peers ➢ MRV is the main low income homebuilder in Brazil ➢ 1 out of 200 Brazilians is a MRV client ➢ National footprint provide us more capillarity and protection from local economy activity downside 6 Launches - LTM (R$ million) Sales – LTM (R$ million) Total: R$ 7,186 milion Total: R$ 6,272 million Source: ER from companies
  7. 7. NET REVENUE (R$ million) * Analysts’ average consensus. CAGR 2007-2016: 30.6% NET INCOME (R$ million) With significant progress year over year 7 CAGR 2007-2016: 33.0% Market consensus: growth in mid term and 32% stock price potential upside Recommendation: Buy (8 banks), Neutral (2 banks) MRVE3 Average Target Price: R$ 17.25 MRVE3 as of 11/03/2017: R$ 13.05 Potential upside 32% Best ROE in the sector, with greater potential to increase shareholders return. ROE x P/BV ➢ MRVE3 is the most valuable stock in the low income segment ➢ Shareholders return through dividends and stock repurchase ➢ R$ 1,345 million in dividends pay out since the IPO (2007) ➢ R$ 365 million in shares buyback program (11% of existing shares)
  8. 8. Quality execution – most attractive and well priced product 8
  9. 9. Our structure is ready to absorb 50k units/year Quality in execution and cost efficiency G&A / Net Revenue Enhancement of productivity indexes and faster asset turnover + Asset turnover + Standardization + Productivity – Overhead structure – Cost discrepancy PI x PS Evolution Brickworks + Molds Aluminum molds Construction Methods Evolution (# units) 2014 2015 2016 2017 58%33%6%2% 9 Since 2015, the Company began to adjust its overhead structure to absorb greater volume of launches, which will dilute even more the expenses. Internal PI Benchmark 3.2 Internal PS Benchmark 8% enhancement Gross margin % Improvement in execution capacity, productivity and reducing cost discrepancy. PI (Productivity Index): Shows how many people are necessary to build one unit. The guideline is: the lower the indicator, the better the result. PS (Production Speed): Shows the monthly POC of the ongoing projects. The guideline is: the higher the indicator, the better the result.
  10. 10. 10 5th year of recurrent Cash Generation totaling R$ 2.8 billion MRV keep investing in landbank in order to sustain its organic growth Lanbank (R$ billion) ➢ The Company's growth has been based on financial efficiency and profitability. ➢ MRV is capable to continuous generate cash, invest in landbank and provide return to the shareholders, maintaining the company’s healthy capital structure – low leverage and high cash position. ➢ Highest credit corporate rating in the sector (brAA-) by Fitch and Standard & Poor´s. Solid cash position & low leverage Cash position x Leverage (R$ billion)
  11. 11. Solid demand in the long term and fund availability Brazilian housing demand supply Brazilian housing demand (accumulated) (in million units) Source: Preliminary data from “Estudo Demanda Futura, UFF, 2016”, “Secretaria Nacional de Habitação” and “Ministério das Cidades” 11 In the next 20 years the market needs to delivery ~30 million houses to meet the total demand. The Company sustainable growth will significantly contribute to it. FGTS Budget from 2017 to 2020: R$ 331.6 billion to finance low income housing or 800,000 units FGTS Net collection (R$ billion) Positive view from macroeconomic recovery Source: FGTS Multiannual budget, Bacen ➢ With the economy recovery (jobs creation and GDP growth) the FGTS fund is going to improve even more its capacity to provide mortgages. ➢ FGTS balance sheet remains robust (AUM R$ 505 bi), reaffirming its sustainability on financing the housing market. Supported by FGTS (Severance Pay Fund for workers) The main source of funding for low income housing *2017: Abrainc projection
  12. 12. Housing Program: FGTS + MCMV (Minha Casa Minha Vida) 12 HOUSING PROGRAM BENEFITS ➢ Political dividends ➢ GPD formation ➢ Jobs creation ➢ Positive Fiscal Balance = 3.3% 4.0% Real Estate Income Taxes 0.7% Subsidies MCMV Fiscal Balance is positive 3.3% Housing Program in Brazil FGTS (contribution from companies) MCMV (Subsidies from government) SBPE (savings deposits) Low income Mid/high income ▪The main source of loans ▪AUM R$ 479 bi ▪R$ 259 billion in mortgages ▪The main source of subsidies to clients ▪Budget = R$ 2billions ▪Up to R$ 47,500/unit • The main source of loans • AUM R$ 626 bi • Units above R$ 240 thousand Typical MRV Client has 7% subsidy MRV 0.7% from treasury 6.3% from FGTS Fonte: FGTS – Jun/17
  13. 13. The expansion plan aims to increase market share in larger cities where is concentrated the high demand for affordable houses in Brazil. Landbank is ready to support the company growth. From 2014 landbank in larger cities has increased by 80% Geographic diversification Expansion plan # of cities From 2007 to 2013 Strategy to increase diversification 13 From 2014 to 9M17 Strategy to increase market share in larger cities Landbank position ('000 units) CAGR: 5.0% Market deterioration contributed to buy well located plot of lands with better prices Land acquisition with 31% discount
  14. 14. More dispersion among the “stores” More launches More units available More sales volume Potential for Growth: inventory level and location 14 SãoJosédoRioPreto Population:446,649 Average sales/month: 126 Average inventory: 1,334 Average sales/month : 99 Average inventory : 1,256 Average sales/month : 99 Average inventory : 1,380 2015 2016 2017 Goiânia (metropolitanregion) Population:2,458,504 The inventory level and location impacts directly in sales volume Average sales/month : 27 Average inventory : 572 Average sales/month : 45 Average inventory : 1,219 Average sales/month : 106 Average inventory : 1,609
  15. 15. 15 Unified management of landbank MRV LANDBANKS Simulation of viability for landbank acquisition MRV Landbank Software Visual register of landbank Monitoring of efficiency of the buyers $ 90.000,00 Edit Landbank SAVE MAP GENERAL DATA SELLER DATA Landbank Simulations BOUGHT Name of the Landbank 1 5,000 sq.m. APPROVING Technical Viability 1 Gross Margin MRV Cost $ 140,000,000 $90,000,000 Average selling price Average Selling Price $ 140,000,000 $ 140,000,000 João da Silva 09/06/2016 REJECTED Technical Vianility 1 +
  16. 16. Leonardo Corrêa Chief Financial and Investor Relations Officer Ricardo Paixão Investor Relations and Financial Planning Officer Matheus Torga Investor Relations Manager Phone: (+55 31) 3615-8153 E-mail: ri@mrv.com.br This presentation is also available on our website: ri.mrv.com.br Contacts 16
  17. 17. 38 years of history 3,000 units per year 25,000 units per year 40,000 units per year ADRs Level1 MRV Foundation Beginning of relationship Start of Geographic Diversification Enactment of Foreclosure / Deed of Trust by Financial Institucions Banks Resume Mortgage Lending Private Equity IPO 1st Negotiation Correspondant Equity Follow-On MCMV 1 MCMV 2 MCMV 3 18
  18. 18. Segment of Operation
  19. 19. 20 Business Model – Focus on low income Real Estate –Low Income Real Estate - Medium/ High Income Purchasing Rational Instalments lower than rent - Purchasing Reason Necessity (1st real estate) Upgrade Funding Abundant and unchanged rates (FGTS) Scarce and recent increase of rates (Saving Accounts) Product Standardized Exclusive Financing Transference During construction phase After key-delivery Cash Flow Receiving in accordance with the construction evolution Financing Provision at the end of construction period Price In line with the inflation ~4x bigger than inflation
  20. 20. Source : BO MRV –Mortgage Lending 06/09/2016. 1) Minimum Wage 2017: R$ 937.00 ➢ Search of the first real estate for family formation ➢ 77% of the clients are single/ engaged ➢ Income range: 61% have an income of up to R$ 2,700 ➢ Young clients: 50% are up to 30 years old ➢ LTV of 75% 21 Client Profile Low Income What our clients are looking for? Medium/High Income ➢ Couples ➢ 56% are single and 52% have children ➢ The monthly medium income is R$ 8,390, being that 41% earn more than R$ 10 thousand ➢ Medium LTV of 62% Source: Inteligência de Mercado Lopes 2015, ACEBIP and BACEN. What the clients are looking for? Purchase Motivation Location Playground area Marriage * Data from March 2015
  21. 21. 22Source: Low income Real Estate: MRV Medium Price, in 2017 price was adjusted with inflation Real Estate Medium/ High Income: Variation FIPE Zap (in 2017, decrease of real price of the units) Economic Segment: focus on the acquisition of the 1st real estate, where there is no speculation and exists huge housing deficit. Appreciation in line with the inflation and low cost financing produces a significant reduction of LTV’s (inflation higher than TR). Evolution of Real Estate Prices The evolution of low income real estate prices has less volatility and more consistency than the medium/high income, preventing the creation of a housing bubble.  Low offer and high demand of low income real estate  MCMV Conditions: ▪Limited income and sales price ▪Sales of 1 real estate per Individual Taxpayer Registration Number ▪Impossibility of resale a unit under the MCMV
  22. 22. Market Opportunities
  23. 23. Funding – FGTS and SBPE Housing in Brazil: 70 years of investment in housing programs Source: Biblioteca Digital da FGV, EESC –USP, FGTS • 1930: Real Estate credit offer by the Caixas Econômicas • 1946: Creation of Casa Popular Fundation – First national housing policy • 1964: Creation of SFH and BNH – with compulsory collection of 1% of monthly payment • 1967: Creation of FGTS – collection of 8% of monthly payment • 1986: Extinction of BNH due to financial difficulties in the inflationary period and increasing FGTS’ withdrawals • 1990: Collor creates the Plano de Ação Imediata para a Habitação (PAIH), which antecipated the construction, in an emergencial manner, of 245 thousand houses • 2000: FHC establishes the Carta de Crédito Individual e Associativa in FGTS and the continuity of projects such as Pró-Moradia and Habitar Brasil. • 2004: Política Nacional de Habitação (Lei 10.931) - Social Subsidy Interest Housing Program • 2009: Creation of MCMV – The biggest housing program in the country • Investment: R$ 294 billion • 10 million brazilians benefited • Maximum income of R$ 6,500 Funding – governamental contributions • 92% OF THE RESOURCES INTENDED FOR THE POPULATION WITH INCOME ABOVE 5 MINIMUM WAGES - 80% OF POPULATION RECEIVE BELOW THIS • ONLY 33.5% OF THE FINANCED UNITS WERE INTENDED FOR POPULAR SECTORS Financed units 24 R$ 7.76 BI FGTS DISCOUNT R$ 63.5 BI FGTS DISCOUNT R$ 10.11 BI OGU DISCOUNT 120,000 1,263,500 2,864,500 857,000 1,355,000 454,000 3,318,508 4,914,288 1930 - 1946 1964 - 1975 1976 - 1982 1983 - 1986 1987 - 1992 1993 - 1997 1998 - 2008 2009 - 2017 Data 2017 up to 05/31/2017
  24. 24. SFH - Brazilian Housing Finance System The source cames from employers depositing 8% of the monthly salary of all workers (Jun/17) Source: Caixa Total Balance of R$ 478 billion Borrowers can use the account balance in few cases: Mortgage Termination of work Retirement Others 12% 66% 14% 8% Mortgage Interest Rate from 5% to 9.16% a.a + TR Units up to: R$ 300,000 SBPE Deposits made on the savings of commercial banks Real Estate Credit Legal Reserves Free Resources 65% 30% 5% SBPE Resources Market Rate Interest Rate from 9.2% 1 to 11% +TR Units of R$300,000 to R$950,000* Borrowers can go to any bank and apply for a real estate loan according to their credit rating Interest Rate from 12.25 2 % +TR Units above: R$950,000Notes: 1) If the client has a salary account in CEF the interest rate can reach 9.75%. In BB it can reach 9.65%+TR. 2) If the client has a salary account in the bank, the interest rate can reach 10.7%+TR. 3) 20% for compulsory deposit (remunerated by SELIC) and 10% for additional compulsory (corrected by TR) * States of DF, MG, RJ, SP: R$ 950,000; other states: R$ 750,000. Workers are remunerated 3% per year+TR 25 FGTS (Severance Pay Fund) - The main source of fund for MRV Balance of R$ 542 billion (Nov/17) Source: Bacen
  25. 25. FGTS ¹ Source up to 2011: PME Unemployment rate and source from 2012: PNAD due to its better sensibility and comprehensiveness. From 2017 to 2021 the FGTS budget is R$ 331.6 billion to be invested in Housing. Obs: In 2007, retirement withdrawals increased significantly due to the spontaneous retirement approval by Federal Supreme Court, reducing the net collection in the period. Source: IBGE, CAGED e FGTS – Sept/17 Withdrawals (R$ billion) Budget (R$ billion) 26 Net Collection (billion)
  26. 26. Minha Casa Minha Vida – Housing Program 84% das vendas MRV são realizadas pelo sistema PRICE* 2 APRIL/09 TO DEC/10 JAN/11 TO DEC/14 ¹ Included 350,000 units added on September 2014. ² Amounts refers to the units to be built in 2016 ³ MCMV 1 and 2: Amounts referring to each program. ⁴ Details not yet released 2017-2018JAN/15 TO JAN/17 27 Program Resources (R$ billion) Units to be built Monthly Income Income Units Income Interest Rate Units Income Interest rate Units² Income Interest rate Units² Group 1 Up to R$ 1,325 482,741 Up to R$ 1,600 4% + TR 1,226,605 Up to R$ 1,800 TR 53,748 Up to R$ 1,800 TR 170,000 Group 1.5 - - - - - Up to R$ 2,350 5% + TR Up to R$ 2,600 5% + TR 80,000 Up to R$ 2,455 5% + TR Up to R$ 2,350 5.5% + TR Up to R$ 2,600 5.5% + TR Up to R$ 2,790 Up to R$ 3,275 6% + TR Up to R$ 2,700 6% + TR Up to R$ 3,000 6% + TR Up to R$ 3,600 7% + TR Up to R$ 4,000 7% + TR Group 3 Up to R$ 4,650 146,623 Up to R$ 5,000 7.16% + TR 307,054 Up to R$ 6,500 8.16% + TR 113,930 Up to R$ 7,000 8.16% + TR 200,000 Group 3 Plus Up to R$ 9,000 9.16% + TR Not available Target (Term) 2 years 5 years 2 years R$ 34 R$ 72.6 R$ 41,2 1,000,000 3,100,000 ¹ R$ 41,2 1 year 2,000,000 Group 2 375,764 1,216,341 800,000 dec-2010 dec-2015 dec-2018 645,692 jan/17
  27. 27. Minha Casa Minha Vida: Subsidies and Units Price SUBSIDIES 28 The Group 1 subsidy is financed with treasury resources. 2 GROUP1.5GROUPS2AND3GROUP3PLUS UNITS PRICE
  28. 28. Payment Breakdown: Typical MRV Client MCMV Group 2 Unit Price: R$ 150,000 WHERE DOES THE SUBSIDIES COME FROM? 0.7% from OGU (National General Budget) 6.3% from FGTS Revenue Taxes per unit sold is 4% 4.0% Real Estate Income Taxes 0.7% Subsidies MCMV Fiscal Balance is positive 3.3% Typical MRV Client: Payment Breakdown The above tax does not include other indirect taxes such as VAT, Social securities and others. 29 Down payment 3% FGTS 4% Subsidies 6% Mortgage with banks (CEF and BB) 76% Mortgage with MRV 11%
  29. 29. MRV on MCMV – Potential for expansion in the next years 0% 0% 0% 0% 0% 5.4% 18.9% 34.7% 0% 13.6% 5.3% 4.4%24.1% 28.2% 32.6% 10.1% 24.3% 15.7% 66.9% 25.8% 43.1% 62.8% 43.1% 37.4% 37.5% 20% 49% 43.3% Capitals Secondary Cities Average 11.6% Average 38.7% 30 MRV MCMV Share MRV Contracted Units- January 2015 to March 2017
  30. 30. 142,873 249,636 96,654 289,648 259,779 56,573 19,759 - 91,362 248,568 267,044 267,04 250,607 260,443 249,306 212,567 72,015 22,889 57,072 45,328 36,705 29,028 26,023 24,951 56,236 21,131 2009 2010 2011 2012 2013 2014 2015 2016 2Q17 Group 1 Group 1,5 Group 2 Group 3 143,894 275,075 104,311 389,073 557,961 175,260 16,890 36.858 12.077 23.849 98,593 277,171 325,953 311,965 288,708 289,715 344,729 282.083 134.131 43,818 102,805 77,935 97,711 93,799 37,609 40,526 68.235 29.084 2009 2010 2011 2012 2013 2014 2015 2016 2Q17 Group 1 Group 1,5 Group 2 Group 3 Contracted and Delivered Units Source: Ministério das Cidades – Datas 2017 up to 05/31/2017 257,124 555,276 409,026 593,393 539,405 286,305 655,051 508,199 798,749 940,948 502,584 402,145 399,253 31 189,473 Contracted Units MCMV Delivered Units MCMV 343,049 277.777 288.562 110,466
  31. 31. Resources invested in the program 2 ✓ Group I – According to Ministry of Planning Budget (PAC) ✓ Group II – According to FGTS • Until 2015: In Group II, subsidy has contribution of 17.5% from National Treasury and 82.5% from FGTS. • After 2015: In Group II, National Treasury contribution is of 10% and of FGTS is 90%. **MCMV3: investments estimated for 2015 to 2018 - FGTS has complementary subsidies (up to R$ 27,500 per unit) + Interest Rates subsidy. - OGU: National General Budget * The number of units to be contracted remains the same as that proposed at the beginning of the MCMV 3. Source: http://www.cgu.gov.br/ 32 Program Groups Family Income Contracted Units Resources (R$ million) Family Income Units up to Ago./2015 Resources (R$ million) Family Income Units up to Jan/2017 Resources (R$ million) Family Income Estimated Units Resources (R$ million) Group 1 Up to R$1,395 482,741 R$ 17,999 (OGU) Up to R$ 1,600 1,226,605 R$ 63,724 (OGU) Up to R$ 1,800 53,748 R$ 1,409 (OGU) Up to R$ 1,800 170,000 R$ 203 (OGU) Group 1.5 From R$ 1,800 to R$ 2,350 From R$ 1,800 to R$ 2,600 80,000 Group 2 From R$ 1,395 to R$ 2,790 375,764 R$ 1,068 (OGU) + R$ 3,187 (FGTS) From R$ 1,600 to R$ 3,275 1,213,341 R$ 4,369 (OGU) + R$ 17,104 (FGTS) From R$ 2,350 to R$ 3,600 645,692 R$ 805 (OGU) + R$ 3,689 (FGTS) From R$ 2,600 to R$ 4,000 800,000 R$ 322 (OGU) + R$ 1,475 (FGTS) Group 3 From R$ 2,790 to R$ 4,650 146,623 - From R$ 3,275 to R$ 5,000 307,054 R$ 110 (FGTS) From R$ 3,600 to R$ 6,500 113,930 R$ 105 (FGTS) From R$ 4,000 to R$ 7,000 200,000 R$ 46 (FGTS) Group 3 Plus - From R$ 7,000 to R$ 9,000 Not Available - TOTAL 1,005,128 R$ 22,254 2,750,000 R$ 85,307 813,370 R$ 6,008 2,000,000* R$ 2,046 MCMV 1 (Apr/2009 - Dec/2010) MCMV 2 (Jan/2011 - Ago/2015) MCMV 3 (Jan/2016 - Jan/2017)** MCMV 3 (Jan/2017 - Dec/2018)**
  32. 32. Market Highlights
  33. 33. # of Cities x Gross Margin Competitive Advantages and Market Potential Note: *Information from Statistics and Information Center, from João Pinheiro Foundation. MRV inhabitants x Landbank in PSV 1.5 million (R$ 3.4 bi) 2.4 million (R$ 5.3 bi) 11.5 million (R$ 29.0 bi) 3.5 million (R$ 6.8 bi) Southeast South Middle-west Northeast Potential market penetration per month 13,719 MRV Actual Performance Additional Potential Total Potential Sales increment (0.72/1000 habitants) Average sales / month (2016) Nationwide Footprint - Present in 22 States and Federal District - 148 cities attended by the Company 10,704 3,015 34
  34. 34. 35 Business Strategy – Dispersion Landbank 2017 Landbank 2013 Fortaleza Fortaleza Fortaleza DISPERSION: STORES AND LAND DISPERSION: STORES AND LAND The strategy consists in having the right amount of land well balanced in each region of the cities, to supply the demand.
  35. 35. In 3Q17, MRV achieved important marks among the listed companies: ➢ 65% of launches market share in group II and III of MCMV Program; ➢ 44% of total launches in the quarter. Competitive Advantages – Market Leader in Brazil Launches Eligible to MCMV Nominal Value (R$ billion) (Groups II and III) Note: The data are estimated and based on the listed Companies’ earnings releases. % of launches in MCMV Program (Groups II and III) – in PSV % of total launches – in PSV 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Other listed companies 36 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
  36. 36. ➢ We have over 4,600 internal brokers, 100% focused in MRV products. ➢ We invest in training and sales techniques to enhance the productivity and quality of our sale process. ➢ Management of commissioning policies of the internal team and definition of sales strategy. Competitive Advantages – Sales Structure 37
  37. 37. Marketing Investment: 2 REACHING 1 ANNUAL INVESTIMENT 3 MAIN CHANNELS 140 Million Brazilians (70% of population) R$ 120 Million Data base: November 2017 R$ 2,5 Billion in virtual sales per year. 135 virtual attendant focused in high quality attendance located in Belo Horizonte.  155 virtual bases all over Brazil with 1,800 brokers Investments Results: Competitive Advantages – Effective Marketing Campaigns Television 30%, Internet 26%, Trade MKT 19%, Newspaper 3%, Other medias: 22% 38
  38. 38. Sources: Alexa and Similar Web – November 2017 Competitive Advantages – Online and Social Midia leadership 39
  39. 39. Resolved demands on 1st contact 92.74% 2017 Relationship Portal General Accesses: 3,655,272 2017 425,855 Number of answered calls in 2017 Costumer Service “Conexão MRV” +200,000 Views of the videos “Conexão MRV” #MeuMundoMelhor +5,000,000 Views of the videos #MeuMundoMelhor Complaints: 0.58%* Year 2017 MRV in Midias 483,484 followers in Twitter 608,165 followers in Google + 3,978,053 Facebook fans *Number of complaints over total clients (5 years) – Annual view Client Relationship Client Access: 69,947 Monthly Average of Single Calls 40
  40. 40. Pre – Sales (% MRV – R$ million) Pre-sales per launching period Sales over Supply Sales over Supply = Pre-sales / (Beginning Inventory + Launches) Pre-sales per launching period Inventory Duration 41
  41. 41. Market leader in the main commercial indicators Launches (R$ million) In 3Q17, MRV launched twice as much the second peer 42 R$million 3Q16 2Q17 3Q17
  42. 42. Market leader in the main commercial indicators Net Sales (R$ million) 43 R$million In 3Q17, MRV sold three times as much the second peer 3Q16 2Q17 3Q17
  43. 43. Operational Advantages
  44. 44. Production Team ✓ Approximately 18 thousand people dedicated to Production ✓ Employees on a leadership position (directors, managers and coordinators) have been working in the company for an average of 9 years. ✓ At this time, we have 223 sites under construction, located in the following areas: Northeast 28 (12.6%) Middle-west 13 (5.8%) South 42 (18.8%) Southeast 140 (62.8%) 11 Director 25 Managers 47 Coordinators 369 Engineers 509 Engineering Auxiliary and Building Technicians 539 interns 18,267 in other positions, being 9,874 MRV employees and 8,393 third part employees. Data-base: May/2017 45Data-base: Sep/2017
  45. 45. Operational Advantages – Mechanization and New Technologies Hydraulic Kit Reduced workforce Less generated waste Greater production rationalization Better site organization Standardized projects Higher speed of production Strategic equipment team Simplification of projects Economically viable Greater environmental sustainability Increased work security Standardization, Mechanization and Intelligent Processes Concrete Prefabricated and standardized door Aluminum Forms Hoisted Slab 46
  46. 46. Years Sample Average Stand. Deviation Variation Coeficient (%) 2012 107 30.36 4.977 16.39% 2013 152 29.69 4.270 14.39% 2014 135 29.73 4.581 15.41% 2015 100 28.77 4.136 14.37% 2016 108 27.25 4.700 17.25% 3Q17 69 25.38 4.041 15.92% 201720162015201420132012 45 40 35 30 25 20 Ano ProjeçãodeCustoMêsMRV Boxplot de Projeção de Custo Mês MRV Operational Advantages - Cost Improvement It is possible to identify a decrease in average cost, reaching the lowest level in 5 years. Which means that our projects are with a better operational efficiency. Boxplot of the Sum of the projection cost Sumofthevalueofprojectioncost Histogram of the Sum of the projected cost Frequency Year Sum of projection cost value Increase of efficiency results in: ✓ Less discrepancy in costs and quality; ✓ Lower execution cost 47 2012 2013 2014 2015 2016 3Q17 Year Average St Dev N 30.36 4.977 107 29.69 4.270 152 29.76 4.581 135 28.77 4.136 100 27.25 4.700 108 25.38 4.941 69
  47. 47. Note: Units presented in (‘000) units. Operational Advantages – Delivered Units 48 Delivered units 9M17 Delivered units 2016
  48. 48. • R$ 4.5 Billion in payments in 2016 • 55,819 Invoices received in December 2016 • 20,520 Employees paid per month • 260 Employees SSC – Shared Service Center • + 5 million views of #MeuMundoMelhor videos. • + 1.4 million acesses to the Relationship Portal in 2016 • 54 thousand: average of calls answered in 2016 • 166 thousand active clients • R$ 400 million collected per month • + 3,000 current accounts reconciled per month • + 3,000 new registered contracts per month • 218 employees • R$ 80 million of investment in IT (5 years) • More than 5,500 work station • 33 million of scanned documents since 2010 • More than 300 tablets in the building site Operational Advantage - Administrative Structure Client Relationship and Internal Communication Information Technology Specialized Services 49
  49. 49. Financial Advantages
  50. 50. Typical MRV accumulated Cash Flow Since simultaneous sales process started, MRV has considerably decreased its collection period, contributing to less working capital need per project launched. Working Capital Need = Payables – Receivables (inventory not included) 51 Average Collection Period (in days) Working Capital Need (in days)
  51. 51. Consistency and stability of the Company’s yields 52
  52. 52. Financial Indicators Net Revenue (R$ million) Gross Margin % 53 3Q16 2Q17 3Q17 R$million 3Q16 2Q17 3Q17
  53. 53. Financial Indicators Net Income (R$ million) 54 R$million 3Q16 2Q17 3Q17 Net Margin - % 3Q16 2Q17 3Q17
  54. 54. Subsidiaries
  55. 55. Subsidiaries MRV share: 40% Present in 25 cities and 9 estates Extended experience in creating business and developing assets. Controls complete cycle of development, construction and administration of its assets. Logistics Complex 100% Greenfield Full control of the cycle, since the landbank acquisition until the delivery of the project Multi-tenant Projects in modules Flexible architecture Lease term of 2 to 10 years Shopping Centers 100% Greenfield Complete Shoppings Operated by specialized Companies Strip Malls 100% Greenfield Regional Commercial Centers Loteamentos Industriais 100% Greenfield Full control of the cycle, since the landbank acquisition until the delivery of the project 56 45,.92%
  56. 56. Executives 60% 40% Development and commercialization of urban lots in residential and commercial segments, all sustainably developed. Subsidiaries ❖ Urbamais operates (i) researching and identifying distinguished areas, aiming to boost the success of its allotments, and (ii) planning and executing the infrastructure and urbanism with high quality and environmental awareness. ❖ The company’s advantages are based on the following pillars: strategic location of its allotments, operational excellence, cost-benefit of the projects, quality of infrastructure and urbanism, relationship with its clients and professional management. 57
  57. 57. ✓ Landbank with PSV of R$2.4 billion; ✓ 404 commercialized units in 3Q17, equivalents to a PSV of R$ 23.4 million; ✓ SOS of 22% in 3Q17 ✓ Launch of a project with 494 units and PSV of R$ 35 million ✓ MRV share: 60% ✓ Portfolio %LOG (in GLA) – 1,549,317 sq. meters of GLA ✓ Permitted GLA – 1,041,674 sq. meters (%LOG) ✓ Delivered GLA – 681,616 sq. meters (%LOG) ✓ Net Revenue: R$ 25 million ✓ Adjusted Ebitda: R$ 19.4 million ✓ Equity: R$1.9 Billion ✓ MRV share: 45.92% 3Q17 Highlights 3Q17 Highlights Results from Subsidiaries 58

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