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2Q13 Results Conference Call
August 12, 2013
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.
1
Recent Events – Gafisa S.A. Enters Into Agreement to Sell 70% Stake in Alphaville to Blackstone and Pátria
▲ Gafisa S.A. signed an agreement to sell a majority stake in Alphaville, valuing AUSA at R$2.01 billion.
▲ Sale transaction to generate expected gross cash proceeds of R$1.4 billion
▲ Proceeds to strengthen Gafisa’s balance sheet by reducing leverage and generating long-term shareholder value
▲ Transaction to allow shareholders, through the 30% remaining stake in Alphaville, to participate in the long-term value creation produced by partnering with two leading investment firms
▲ Opportunity to unlock significant value generated under Gafisa’s stewardship since the acquisition in 2006
▲ Cash proceeds will reduce leverage, allowing increased focus on operating performance
▲ Gafisa also agreed to complete the purchase of the outstanding 20% stake in Alphaville which it did not already own, finalizing the arbitration process for a total consideration of R$367 million,
2
Second Quarter Highlights
▲ 2Q13 sales of R$554 mm exceeded launches of R$461 mm and increased q-o-q
▲ Sequential improvement in SoS on higher gross sales and fewer dissolutions
▲ 1H13 unit deliveries represented 30% of guidance midpoint
▲ Performance of new Tenda launches sound and in line with the Company’s expectations
▲ During the 1H13, Gafisa Group expanded its landbank in order to support future growth, with acquisitions of R$1.0 billion in PSV
▲ At the end of June, the Company had R$1.1 billion in cash and cash equivalents
3
Gafisa Segment – Status of the Turnaround StrategyGafisa’s brand increasingly focused on Strategic Markets
Gross Margin per Market (2011-1S13) Net Revenue per Market
▲ Gafisa’s operations in strategic markets, especially SP, are performing well. However, on a consolidated basis, margins continue to be impacted by non-core markets
4
2011 2012 1H13
20% 18%8%
20% 17%
13%
60% 65%79%
Other markets RJ SP
2011 1Q12 2Q12 3Q12 4Q12 2012 1Q13 2Q13 1H13-70.0%
-50.0%
-30.0%
-10.0%
10.0%
30.0%
50.0%
SP RJ Other markets
Gafisa Segment - Status of the Turnaround Strategy
▲ Delivery of legacy projects is in line with guidance and should conclude by year-end. Currently, 3 projects remain under construction, with delivery scheduled for 2H13. Only 1 project (4 phases) is scheduled for 2014
Construction Execution per Market (2Q13-4Q15)
5
2011 2012 2013E 2014E 2015E
25% 19% 14% 17%0%
14%13%
9% 4%
0%
61% 68%77% 78%
100%
Other markets RJ SP
2011 2012 2013 2014 2015
28%18%
8% 9%0%
15%17%
16%5%
0%
57%66%
76%86%
100%
Other markets RJ SP
Other markets data 2011 2012 2013 2014 2015Number of phases/works 30 14 6 4 -
Other markets data 2011 2012 2013 2014 2015Units 6,300 2,714 720 360 -
Projects/Phases Units
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
227
546
114
814
101
217
Descontinued markets Strategic markets
Launches per Market (1Q12-2Q13) Gross Sales per Market (1Q12-2Q13)
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
9
47 48
26
65
4842
71
123
75
127
90
Descontinued markets Strategic markets
Resale of Cancelled Units (1H13)Dissolutions per Market (1Q12-2Q13)
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
2755 46 56 48 63
340
520
453
544
244291
Descontinued markets Strategic markets
SP RJ NM
40%
56%
21%
Gafisa Segment - Status of the Turnaround Strategy
6
▲ Concentration of Launches and Sales in strategic markets
▲ Dissolutions gradually reducing, and should reach normalized levels
Tenda Segment - Status of the Turnaround Strategy
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
0
20
40
60
80
100
120Units under Construction Sites
Continued progress in the conclusion and delivery of Tenda legacy projects
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13600
650
700
750
800
850
900
950Legacy Inventory
7
units units R$ million
Gross Sales (4Q11-2Q13) Dissolutions (4Q11-2Q13)
2Q12 3Q12 4Q12 1Q13 2Q13
14
12
1011
7
Tenda – Financial Cycle (2Q2-2Q13)
▲ Dissolutions continue to decline as Tenda concludes the units of legacy projects, developed out of the new fundamentals, and transfer them to financial institutions
Note: 61% of 1H13 cancelled units were already resold within the quarter
Tenda Segment - Status of the Turnaround Strategy
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
467
340 329
264
318
232
158
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13
248 249
345
294 288
239
328
NEW LAUNCHES
LEGACY PROJECTS
8
4
▲ Tenda’s financial cycle is sound. The average time has been halved to 7 months in the 2Q13, from 14 months in the same period last year
▲ In 2Q13, the financial cycle (average time between sale, unit transfer and registration) for new launches was around 4 months
Launches resumed under new business fundamentals
Tenda Segment - Status of the Turnaround Strategy
Chart 5. Tenda New Launches Under Fundamentals
Launches 1H13
Novo Horizonte
Vila Cantuária
Itaim Paulista Life
Launches
mar-13
mar-13
may-13
PSV Launches (R$ mil)
67.755
45.941
33.056
# Units Launched
580
440
240
% PSV Units Sold¹
77,7%
22,1%
26,5%
% Units Transferred²
37,6%
8,0%
0,0%
Project
Osasco - SP
Camaçari - BA
São Paulo - SP
¹In July 2013, the % of units sold reached 92% (Novo Horizonte), 29% (Vila Cantuária) and 28% (Itaim Paulista Life). ²In July, the % of units trasferred was 62% (Novo Horizonte), 17% (Vila Cantuária) and 0% (Itaim Paulista Life).
9
Information regarding Tenda’s launches on 1H13
Gafisa Tenda Alphaville
86%
55%
81%
14%
45%
19%
Under construction Concluded units
Inventory distribution by Construction Status, Launch Year and Market
Inventories BP1 1Q13
Launches Dissolutions Pre-salesPrice Adjustments +
Others5
Inventories EP2 2Q13
% Q/Q3 SoS4
Gafisa (A) 1,921,120 215,910 137,674 (354,585) 87,690 2,007,810 5% 9.8%Alphaville (B) 808,927 212,077 59,350 (226,237) 32,248 886,365 10% 15.8%Tenda (C) 772,992 33,056 157,848 (327,689) 43,492 679,699 -12% 20.0%%Total (A)+(B)+C) 3,503,039 461,043 354,872 (908,511) 163,430 3,573,874 2% 13.4%
Note: * 1) BP beginning of period – 1Q13. 2) EP end of period – 2Q13. 3) % variation 2Q13 vs. 1Q13 4) Sales speed on 2Q13. 5) Cancelled projects in the period
Inventories at Market Value at 2Q13 x 1Q13 (R$ 000)
Inventory at market value per construction status
84%
16%
SP and RJ Other Markets
88%
12%
Legacy Projects New Projects
Gafisa segment- Inventory at market value per market
Tenda segment - Inventory at market value by vintage
10
Classification of Alphaville as held for sale, with the retention of associate non-controlling interestGiven the impending sale of a 70% stake in Alphaville and associated transfer of operations to the buyers, these assets have been classified as held for sale
1H13 Official Numbers Versus Non-Audited Reconciliation
R$000Official 1H13
Adjustments Pro-Forma 1H13
Income StatementAmounts posted
06.30.13
Impact of adopting CPC 18(R2), 19
(R2) and CPC 36 (R3)
Impact of adopting CPC 31
Excluding the impact of the
effects mentioned
Net Operating Revenue 1.148.414 89.792 394.772 1.632.978Operating Costs (926.471) (82.549) (201.967) (1.210.988)Gross profit 221.943 7.243 192.804 421.990OPEX (250.762) (14.815) (90.065) (355.642) Equity Income 3.631 (6.880) 3.249 0Net Interest Income (82.827) 8.345 (14.629) (89.111)Income Tax and Social Contribution (13.429) (1.016) (7.344) (21.789)Minority Shareholders (25.307) 243 (0) (25.064)Results Descontinued Operations 80.765 0 (80.765) 0Net Loss from Continued Operations
(69.617) 0 0 (69.617)
EBITDA Margin 13,2% 12,3%
Balance sheet Official 1H13
Adjustments Pro-Forma 1H13
Current Assets 6.745.681 769.575 (631.039) 6.884.207Long-term Assets 1.042.373 (12.963) 452.409 1.481.819Intangible and Property and Equipment
149.850 28.563 143.517 321.930
Investments 554.840 (589.953) 35.113 0Total Assets 8.492.744 195.222 0 8.687.966Current Liabilities 2.873.442 (103.748) (293.425) 2.683.765Shareholders' Equity 2.618.458 (2.763) 0 2.615.695Shareholders' Equity 2.449.326 0 0 2.449.326Non controlling interests 169.132 (2.763) 0 166.369Liabilities and Shareholders' Equity 8.492.744 195.222 0 8.687.966ND/E 96% 102%
11
On June 30, 2013 Gafisa’s financial statements reflect the effects of the70% stake sale of AUSA which its assets and liabilities were classified as "non-current assets and liabilities held for sale" in accordance with CPC 31
▲ Between July 2013 and the date of completion of the sale of AUSA, given the purchase of the remaining 20% stake of the AUSA on July 3, 2013, we will report on a consolidated 100% of the result of AUSA as "Income from discontinued operations", without highlighting this minority investment. In the holding Company will report the result of 100% AUSA in the line of equity income. The assets and liabilities continue to be reported as "assets and liabilities held for sale".
▲ After the completion of the sale of 70% stake in AUSA we will no longer consolidate the assets, liabilities and results of the company. Our minority interest of 30% will be demonstrated throughout the account line "Investments" and the results will be captured through equity income. At the same time, classifications of "Assets and Liabilities held for sale" and "Income from discontinued operations" will no longer exist.
Until Jun/14 Until Jun/15 Until Jun/16 Until Jun/17 After Jun/17
57% 54% 49%30%
0%
43% 46% 51%70%
100%
Corporate Debt Project Finance
Total
Investors Obligations
Working Capital
SFH / Project Finance
Debentures Working Capital
Debentures FGTS
3,620
1,062
128
996
736
697
Total debt Cash Net debt Net Proceeds
(sale transaction + purchase 20% stake)
Post transaction Net Debt
3,620
2,519
1,604
1,101
915
Indebtedness (R$ mm) and TaxesLeverage 2Q13 vs Pro-forma Post Transaction
Note: preliminary unaudited results1 Net of liabilities related to R$250 mn in securitization2 Pro-forma Post Transaction 2Q13.
Debt Maturity as % of Total Debt
Net Debt/ Equity 0.96x8.2% - 10.2% (TR)
0.7% - 1.9% (CDI)
8.3% - 12.0% (TR)
0.2% - 1.0% (CDI)
9.54%
Gafisa Group - Post-Transaction, Flexible Balance Sheet
0.54x
1.3% - 2.2% (CDI)
1,179 1,252 920 341 237
R$
R$
Gafisa’s net debt/equity ratio is expected to drop from 96% reported in 2Q13 to approximately 54%, based on pro forma unaudited information for the period
12
2T13 1T13 2T12
Project financing (SFH) 736 785 579
Debentures - FGTS (Project Finance) 1.062 1.190 1.213
Debentures - Working Capital 698 585 568
Working Capital 996 908 987
Investor Obligations 128 134 243
Total Consolidated Debt + Obligations 3.620 3.602 3.590
Consolidated Cash and Cash Availabilities 1.101 1.146 834
Net Debt + Investor Obligations 2.519 2.456 2.756
Equity + Minority Shareholders 2.618 2.644 2.745
(Net debt + Obligations) / (Equity + Non-controlling) 96% 93% 100%
Debt Profile Project Finance Debt 1.798 1.975 1.792
Corporate Debt and Investor Obligations 1.822 1.627 1.798
Total Consolidated Debt + Obligations 3.620 3.602 3.590
Project Finance (% stake of total debt) 50% 55% 50%
Corporate Debt (% stake of total debt) 50% 45% 50%
Net Debt to Equity stable at 96%
(R$ million)
13
Note: Consolidated Pro-Forma unaudited financial information are presented for 1Q13 and 2Q12 only for informative and comparability purposes with 2Q13 data. The calculation of this amount considered Alphaville consolidation effects and the adoption of new accounting rules over the consolidation of joint arrangements control.
▲ Comfortable cash position of R$1.1 billion
▲ Consolidated cash burn of R$28 million in 2Q13
▲ Net Debt / Equity was 96%
▲ Project finance represented 50% of total debt
▲ 43% of short-term debt comprises project finance
(1) excluding R$35 millions of expenses related to the share buyback program.
Outlook
Launches Guidance – 2013E
Guidance(2013E)
Actual numbers 2Q13A
Consolidated Launches R$2.7 – R$3.3 bi 769mnBreadown by BrandLaunches Gafisa R$1.15 – R$1.35 bi 299mnLaunches Alphaville R$1.3 – R$1.5 bi 323mnLaunches Tenda R$250 – R$450 mn 147mn
Guidance(2013E)
Actual number 2Q13A
Consolidated Stable 95% 96%
Guidance(2013)
Actual numbers 2Q13A
Consolidated (# units)
13,500 – 17,500 4,673
Delivery by Brand# Gafisa Delivery 3,500 – 5,000 1,728# Alphaville Delivery 3,500 – 5,000 419# Tenda Delivery 6,500 – 7,000 2,526
Guidance(2013E)
Actual number 2Q13A
Consolidated 12% - 14% 13%
Launch Guidance – 2013 Estimates
Guidance Leverage (2013E)
Guidance EBITDA Margin (2013E)
Delivery Estimates 2013E
14
▲ Considering Alphaville’s sale to Blackstone and Pátria, 2013 operational goals established in the beginning of 2013 remain unchanged
▲ The Company will provide guidance to reflect changes in accounting criteria in a timely manner
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