The document is a corporate presentation for MRV Engenharia e Participações S.A. that provides an overview of the company. It discusses MRV's leadership position in the low income housing market in Brazil, with over 376,000 units sold. It highlights the company's national footprint, operational efficiency through standardization, and focus on product quality. Financially, it notes MRV's track record of growth and profitability, generating over R$2.8 billion in cash over the past 5 years. It also outlines the sustainability of Brazil's housing program through continued government support and funding availability from the FGTS severance fund.
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. 1. Highlights
2. Corporate Governance
3. Market Share
4. Operational Efficiency
5. Product Quality
6. Financial Results
7. Sustainability of the Housing Program
8. Potential of Growth
9. Innovation
Attachments
3
Glossary
5. 5
MRV at a glance
Leading homebuilder in Latin America with over 376 thousand units sold
38 years of history with presence in all Brazilian key markets
National footprint: presence in 149 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$ 7.2 billion (US$ 2.2 billon*)
MRVE3 average trading volume at B3: US$ 13.8 million (1Q18)
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
* (05/11/2018: US$ 1 = R$ 3.60)
7. Strong Corporate Governance
• Statutory Auditing (CAE)
• Governance and Ethics
• People
• Operations
• 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) and Supervisory Board
composed by 3 members
Executives interests in line with our shareholders through long term Stock Option Plan
Free float represents 65.6% of shareholder’s equity
Communication Chanel:
• Shareholders' recommendations:
assembleia@mrv.com.br
• Confidential Channel:
https://canalconfidencial.com.br/mrv/
60.5%
• Other
Shareholders
32.6%
• Rubens
Menin T. de
Souza
5.1%
• Prudential
Plc.
1.5%
• Executives
and Board
Members
0.3%
• Treasury
shares
EXECUTIVE COMMITTEES
Shareholders Structure
7
9. 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
9
Launches - 2017
(R$ million)
Net Sales – 2017
(R$ million)
Total: US$ 2,658 million Total: US$ 2,440 million
Source: ER from companies
* (03/31/2018: US$ 1 = R$ 3.3054)
11. Land prospection and
acquisiton
• MRVDI/Lanbank
Comercial
• New Product Line (Eco, Bio, Premium)
• Finishing Kit
Mortgage
Department
• SAC/SICAQ sales process
• Zero Cancelation Sales
Production
• BIM
• Alluminum molds
• Eletrical whip
• “MRV + Verde” and “Obra Verde MRV” seals
Warranty
Services • AT “fits in your palm”
• Enchant
Key delivery
Customer
Relationship
• “Mão na roda”
• “Meu Decorado”
• APPs
11
MRV Pillar: operational efficiency
Productivity increase and Innovation
12. 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
61%33%6%2%
12
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
3.0
Internal PS
Benchmark
8.1%
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.
2018
72%
16. NET REVENUE (R$ million)
* Analysts’ average consensus.
CAGR 2007-2016:
28.6%
NET INCOME (R$ million)
With significant progress year over year
16
CAGR 2007-2016:
31.3%
Market consensus: growth in mid term and 19%
stock price potential upside
Recommendation: Buy (8 banks), Neutral (2 banks)
MRVE3 Average Target Price: R$ 17.71 (US$ 4.91)
MRVE3 as of 03/31/2018: R$ 14.85 (US$ 4.12)
Potential
upside
19%
Best ROE in the sector, with greater potential to increase
shareholders return.
ROE x P/BV
(2017)
MRVE3 is the most valuable stock in the low income segment
Shareholders return through dividends and stock repurchase
US$ 563 million in dividends pay out since the IPO (2007)
US$ 111 million in shares buyback program (11% of existing shares)
* (03/31/2018: US$ 1 = R$ 3.3054)
17. 17
5th year of recurrent Cash Generation totaling R$ 2.8 billion MRV keep investing in landbank in order to sustain its
organic growth
Landbank (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)
18. 18
Total Cash Position, Available Cash and Debt Profile
Term – Liquidity Projection
DEBT FLOW OF MRV CORPORATE DEBT
(R$ million)
443
259
760
382
307
70 61
132
148
125
70
53
31 30
2018 2019 2020 2021 2022 2023 2024
Principal Juros
575
408
884
452
359
101 90
Balance of Debt: 03/29/2018
Interest
20. 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” 20
In the next 20 years the market needs to delivery ~30 million
houses to meet the total demand.
FGTS Net collection
(R$ billion)
Positive view from macroeconomic recovery
Source: FGTS Multiannual budget, Bacen
Supported by FGTS (Severance Pay Fund for workers)
The main source of funding for low income housing
21. FGTS
¹ Source up to 2011: PME Unemployment rate and source from 2012: PNAD due to its better sensibility and comprehensiveness.
From 2018 to 2021 the FGTS budget is R$ 263.5 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 – Dec/17
Withdrawals (R$ billion)
Budget (R$ billion)
21
Net Collection (billion)
22. 7.1 7.1
4.1
8.6
2014 2015 2016 2017*
Net Income
(R$ billion)
+106,9%
22
Caixa Econômica Federal: the main bank for low income mortgage
340
385
406
432
2014 2015 2016 2017
Balance of Credit Portfolio - Housing
(R$ billion)
Quality of 2017 Portfolio:
The Housing balance represented 61% of the
total credit portfolio.
MCMV Contracts:
In 2017, R$ 57.8 billion assigned to more than
482 thousand housing units
2017 Adjusted*: Exclude the extraordinary event of Saúde CAIXA reversal of
actuarial provision.
Assets under Management:
FGTS balance: R$ 489 bi
Reaffirming its sustainability to
finance the housing market.
Source: Caixa Financial Statements– Dec/17
23. 23
Housing Credit Portfolio by Risk level
68%5%
10%
10%
7%
AA A B C ≤D
99% of real estate portfolio is concentrated in credit risk up C
level. Considering that 80% of AA portfolio is under mortgages.
EVEN WITH 0.42% DECREASE ON THE TOTAL PORTFOLIO,
THE HOUSING CREDIT ROSE 6.3%
Housing Credit (R$ billion)
Evolution of 6% in 12 months
384.6
406.4
431.7
2015
2016
2017
55%
45%
FGTS SBPE
CAIXA remains the market leader with 69% of market share
MCMV CEF – 2017 Results
2,604
PROJECTS
R$ 57.8 BILLION
CONTRACTED PSV
482,844
CONTRACTED
UNITS
426,007
DELIVERED
UNITS
Source: Caixa Financial Statements– Dec/17
Caixa Econômica Federal: the main bank for low income mortgage
24. 24
Housing Policies around the world
Housing policies are a priority in every country in the world, especially to give access to
the low-income population.
Malasya
Program with the
purpose of
encouraging the
private market to
build 10,000 houses
at an affordable price.
India
Provides mortgage to
the low income
population at 6.5%
interest rate.
Sweeden
In the 1960s, the housing
deficit led to the creation
of a program that built +1
million apartments,
known as PUBLIC
HOUSING.
Canada
The Mortgage Insurance
helps borrowers to
obtain financing at
competitive interest
rates.
The Russian government
has decided to subsidize
real estate loans in order
to support the residential
real estate market
Russia
25. 25
MCMV: Beginning in 2009
5 million contracted units
3.6 million delivered units
Investments of R$ 294 billion
in all income levels
MCMV benefits:
• Political return
• GDP formation
• Jobs creation
• Positive Fiscal Balance
Housing Program: FGTS + MCMV
(Minha Casa Minha Vida)
Housing in Brazil:
87 years of investment in Housing Programs
1930: Offer of real estate credit by the Caixas Econômicas
1946: Creation of “Fundação Casa Popular” – 1st national housing policy
1964: Creation of the SFH and the BNH – with compulsory collection of 1% of the payroll
1967: Creation of the FGTS – collection of 8% of payroll
1986: Dissolution of BNH: inflationary period and increasing withdrawals in FGTS
1990: President Collor creates the “Plano de Ação Imediata para a Habitação” (PAIH).
2000: Individual and Associative Letter of Credit in FGTS and “Pró-Moradia” and “Habitar Brasil”.
2004: National Housing Politics - Social Interest Housing Subsidies
2009: Creation of MCMV – The largest housing program in Brazil
2011: Approval of the 2nd phase of MCMV
2015 : Approval of the 3rd phase of MCMV
2018: Continuity of the 3rd phase of MCMV
The Housing Program was
consolidated as a Estate
Policy.
Source: Caixa Financial Statements– Dec/17
26. Housing Program: FGTS + MCMV
26
Source: FGTS balance sheet– Sep/17
OGU
10%
FGTS
90%
Source of the Subdsidies
(bracket 1.5, 2 and 3)
FGTS = FUNDING
Independence from
the Governement
MCMV = SUBSIDIES
• Clients and companies main source of
financing
• Interests subsidies for the clients
• AUM: R$ 486 bi
FGTS 2018 Budget: 2018 to 2021:
• R$ 260 billion to finance housing
• 90% focus on MRV segment (brackets 1.5,
2 and 3)
• 1.6 million of houses.
• Clients main source of discount subsidies
• Budget: R$ 2 billion (specially level 1)
• Up to R$ 47,500/unit
FGTS sources to maintain
investiments and subsidies are:
• Payroll base
• Earned profits from assets
investments
28. 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 91%
Geographic diversification
Expansion plan
# of cities
From 2007 to 2013
Strategy to increase
diversification
28
From 2014 to 1Q18
Strategy to increase
market share in
larger cities
Landbank position ('000 units)
CAGR: 5.2%
Market deterioration contributed to buy
well located plot of lands with better prices
Land
acquisition
with 31%
discount
29. More dispersion
among the “stores”
More launches
More units
available
More sales volume
Potential for Growth: inventory level and location
29
SãoJosédoRioPreto
Population:446,649
Average sales/month: 126
Average inventory: 1,334
Average sales/month : 99
Average inventory : 1,256
Average sales/month : 97
Average inventory : 1,210
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 : 112
Average inventory : 1,580
30. 30
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
+
32. 32
Digital Transformation
Inteligent and Customized
Sales processes
Virtual Assistent
RPA – Robotic Process Automation
Use of Artificial Intelligence to automate
processes.
Optimization of service capacity.
Reduced operating costs.
QR Code
QR Code as a unit chassis
Visualization of documents guided
by the physical location
Watson Explorer
Interactive Owner's
Manual
Evolution of Robots at
Cognitive Level
34. 34
Cases and Future Projects
Polymeric LaminateSolar Energy
Alternative to replace tiles.
3D PrintProduction with BIM
3D Projects
Integrated budgeting
35. Innovation: Projects Pipeline and initiatives
IP 2.5 DIGITAL SEAL 4.0 INDUSTRY
“MARATONA
DE IDEIAS”
PIPELINE
Production Index 2.5:
Enhancement of
operationg efficiency
Ramp-up and Digital Seal
monitoring
Initiatives to automate
construction sites
Selection and monitoring of
projects aiming at financial
and process improvement
Initiatives and studied
cincepts:
Design Thinking Products
• Vending Machine
• SPV structure
• MRV Energy
35
36. 36
Leonardo Corrêa
Diretor Executivo de Finanças e Relações com Investidores
Ricardo Paixão
Diretor de Relações com Investidores e Planejamento Financeiro
Matheus Torga
Gerente Executivo de Relações com Investidores
Tel.: (+55 31) 3615-8153
E-mail: ri@mrv.com.br
Esta apresentação encontra-se disponível em nosso site:
ri.mrv.com.br
Contatos
37.
38. 2018
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
38
40. 40
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
41. 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%
41
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
42. 42Source: 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
44. SFH - Brazilian Housing Finance System
The source cames from
employers depositing 8%
of the monthly salary of
all workers
(Set/17)
Source: Caixa
Total
Balance of
R$ 505.8
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
44
FGTS (Severance Pay Fund) - The main source of fund for MRV
Balance of R$ 726 billion
(Jan/18)
Source: Bacen
45. 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
45
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
46. Minha Casa Minha Vida: Subsidies and Units Price
SUBSIDIES
46
The Group 1 subsidy is financed with treasury resources.
2
GROUP1.5GROUPS2AND3GROUP3PLUS
UNITS PRICE
47. 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.
47
Down
payment
3%
FGTS
4% Subsidies
7%
Mortgage with banks
(CEF and BB)
76%
Mortgage
with MRV
11%
48. 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%
48
MRV
MCMV
Share MRV Contracted Units- January 2015 to March 2017
49. Contracted and Delivered Units
Source: Ministério das Cidades – Datas 2017 up to October/2017
49
Contracted Units MCMV
Delivered Units MCMV
50. 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/
50
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)**
52. # 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$ 3.8 bi)
2.4 million
(R$ 5.4 bi)
11.5 million
(R$ 30.5 bi)
3.5 million
(R$ 6.7bi)
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
- 149 cities attended by the Company
10,704
3,015
52
53. The strategy consists in having the right amount of land well balanced in each region of the cities,
to supply the demand.
Sales level: 60 sales/month
Inventory: 930 units
Dispersion: Units in 2 stores
Sales level: 90 sales/month
Inventory: 1,100 units
Dispersion: Units in 4 stores
Fortaleza
Landbank Units for saleUnits for saleLandbank
2017 DISPERSION: STORES AND LAND
53
Fortaleza Fortaleza
2016 DISPERSION: STORES AND LAND
Stores Strategy: implemented strategy, sales increase
54. In 4Q17, MRV achieved important marks among
the listed companies:
63% of launches market share in group II and
III of MCMV Program;
38% 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 4Q17
Other listed companies
54
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
55. 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
55
Sales Channels
56. 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%
56
57. Sources: Alexa and Similar Web – November 2017
Competitive Advantages – Online and Social Midia leadership
57
58. 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
58
60. Market leader in the main commercial indicators
Launches
(R$ million)
In 4Q17, MRV launched twice as much the second peer
60
R$million
4Q16
3Q17
4Q17
Obs: Cyrela has not updated the database of MCMC for the 4Q17.
61. Market leader in the main commercial indicators
Net Sales
(R$ million)
61
R$million
In 4Q17, MRV sold almost two times as much the second peer
4Q16
3Q17
4Q17
Obs: Cyrela has not updated the database of MCMC for the 4Q17.
63. Production Team
Approximately 18 thousand people dedicated to Production
Employees on a leadership position (directors, managers and
coordinators) have been working in the company for an average of 9 years.
At this time, we have 212 sites under construction, located in the following
areas:
Northeast 26 (12%)
Middle-west
13 (6%)
South 49 (23%)
Southeast 125 (59%)
10
Directors
24 Managers
55 Coordinators
340 Engineers
904 Engineering Auxiliary and
Building Technicians and Interns
18,882 in other positions, being 9,903
MRV employees and 8,979 third part
employees.
63Data-base: Mar/2018
64. Operational Advantages – Mechanization and New Technologies
Hydraulic Kit
Reduced workforce
Less generated waste
Greater production rationalization
Better site organization
Standardized projects
Higher speed of production
Strategic equipment team
Simplification of projects
Economically viable
Greater environmental sustainability
Increased work security
Standardization, Mechanization
and Intelligent Processes
Concrete
Prefabricated and
standardized door
Aluminum Forms Hoisted Slab
64
65. Years Sample Average Stand. Deviation Variation Coeficient (%)
2012 107 30.36 4.977 16,39%
2013 152 29.69 4.270 14,39%
2014 135 29.73 4.581 15,41%
2015 100 28.77 4.136 14,38%
2016 109 27.39 4.905 17,91%
2017 98 25.06 4.067 16,23%
2018 18 23.52 4.830 20,55%
Operational Advantages - Cost Improvement
It is possible to identify a decrease in average cost, reaching the lowest
level in 7 years.
Which means that our projects are with a better operational efficiency.
Increase of efficiency results in:
Less discrepancy in costs and quality;
Lower execution cost 65
Data-base: April 2018
66. Note: Units presented in (‘000) units.
Operational Advantages – Delivered Units
66
Delivered units 2017
67. • R$ 4.5 Billion in payments in 2016
• 50 thousand processed Invoices in November 2017
• 20,520 Employees paid per month
• 260 Employees
SSC – Shared Service
Center
• + 5 million views of #MeuMundoMelhor videos.
• + 3 million acesses to the Relationship Portal in 2017
• 426 thousand: answered calls in 2017
• +53 Thousand downloads of Clients App
• R$ 400 million collected per month
• + 3,000 current accounts reconciled per month
• + 3,000 new registered contracts per month
• 218 employees
• R$ 211 million of investment in IT (5 years)
• More than 5,500 work station
• High Availability and Scalable System –
private and public cloud
• Cutting-edge technologies: BIM, Artificial
Intelligence, BOTs and Predictive Analysis.
Operational Advantage - Administrative Structure
Client Relationship
and Internal
Communication
Information
Technology
Specialized Services
67
69. 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) 69
Average Collection Period
(in days)
Working Capital Need
(in days)
75. Subsidiaries – LOG Commercial Properties
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
75
45,.92%
76. 76
Business Model
GEOGRAPHICAL
DIVERSIFICATION
CONSTRUCTION
DNA
FLEXIBILITY
DIVERSIFIED
PORTFOLIO
Low Cost
Portifolio Risc
National Presence1
Diverse customer base and low risk
Low concentration in billing, whether
from customers or industry.
25% of our customers have a good
level of public rating issued.
4
2
Expertise in project management
Quickness
Standardization
Scale
Privileged and strategic location
Presence in 25 cities and 9 states.
Potential portfolio of 1.5 million sq.m.
Strategic location, close to major
national urban centers.
Commercial Strategy3
Ability to attend all types of demand
Size
Location
Client
77. 77
FLEXIBILITY - MODULAR WAREHOUSES
LOG CONTAGEM II/MG
LOG modular warehouse allow for better business negotiation
and faster absorption
Capacity to attend any customer demand
Business Risk Reduction due to the pulverized customer base
LOG GAIOLI/SP
LOG LONDRINA/PRLOG FORTALEZA/CE
78. 78
VALUE GENERATION - PORTFOLIO LOG TO DEVELOP
IllustrativeScenario
Assuming real interest rates at 4% for one year (while there is no rent )
25
40
14
113
40
113
15
60
62
60
175
Total Cost
100
Yield on Cost
14%
At
8% Cap Rate
Gain
on
Equity
Rent
Funding
Breakdown Value
Equity Value
Creation
Capex
Breakdown
Land and
Constructi
on
(Equity)
(Equity)
(Equity)
(Equity)
(Equity)
(Equity)
(Equity)
(Debt) (Debt)
(Debt)
2.8x
Initial
Final
Total
100
Land
25
Construction
75
Portfolio development generates great value
to LOG's shareholders in a short and long
term
Expectation of increase in Yield on Cost
Efficient construction process with less and
less use of equity.
79. Executives
60%
40%
Development and commercialization of urban lots in residential and commercial segments, all sustainably
developed.
Subsidiaries – Urbamais
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.
79
80. Landbank with PSV of R$ 2.6 billion;
231 commercialized units in 1Q18, equivalents to a PSV of R$ 14 million;
SOS of 17% in 1Q18
3 projects under construction
MRV share: 60%
Portfolio %LOG (in GLA) – 1,508,113 sq. feet of GLA
Permitted GLA –– 1,173,014 sq. feet (%LOG)
Delivered GLA – 688,587 sq. feet (%LOG)
Net Revenue: R$ 25.1 million
Adjusted Ebitda: R$ 20.7 million
Equity: R$ 2 Billion
MRV share: 45.92%
1T18 Highlights 1T18 Highlights
Results from Subsidiaries
80
