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1Q14 RESULTS Conference Call
May 12, 2014
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.
Gafisa Segment
▲ Gafisa’s consolidated launches totaled R$353.9 million in 1Q14, up 326% q-o-q;
▲ Consolidated pre-sales totaled R$187.5 million in 1Q14, an increase of 85% y-o-y;
▲ Adjusted gross profit in the period was R$116.5 million and adjusted gross margin rose to 35.7% from 29.9% in 1Q13;
▲ Adjusted EBITDA was R$54.8 million in 1Q14, above the R$45.0 million registered in 1Q13, while the EBITDA margin reached 16.8% from 12.2% in 1Q13;
▲ In 1Q14 Gafisa’s net loss was R$2.3 million. Excluding the AUSA equity pick-up, the segment’s net income was R$1.1 million compared to a loss of R$49.9 million in 1Q13.
1Q14 Results
3
Gafisa Segment
1Q14 4Q13 Q/Q(%) 1Q13 Y/Y(%)
Launches 353,934 679,154 -47,9% 83,029 323,6%
Pre-sales 187,555 454,457 -58,7% 101,116 85,5%
Pre-sales of launches 37,915 264,049 -85,6% 11,696 224,2%
Sales over Supply (SoS) 7.9% 17.8% -55,6% 5.0% 58,0%
Delivered projects. units 524 1,249 -58,0% 86 509,3%
Net Revenue 326,750 489,853 -33,3% 367,285 -11,0%
Adjusted Gross Profit 116.530 205.660 -43,4%
109.843 6,1%
Adjusted Gross Margin¹ 35,7% 42,0% -630bps 29,9% 580bps
Adjusted EBITDA ² 54,810 125,177 -56.2% 44,970 21.9%
Adjusted EBITDA Margin ² 16.8% 25.6% -880bps 12.2% 460bps
Net Income (Loss) (2,331) 908,827 - (11.621) -
(R$ 000 and % Gafisa, except where otherwise stated)
1) Adjusted by capitalized interests
2) Adjusted by expenses with stock option plans (non-cash). Minority, and AUSA equity
Operational and Financial Highlights
4
80% 82% 95% 95%
20% 18% 5% 5%
2011 2012 2013 1T14
SP+Rio Outros Mercados
Gafisa Segment
227
546
114
814
101
217
107
679
354
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
SP + RJ
Launches by Market (1Q12-1Q14) Gross Sales by Market (1Q12-1Q14)
340
520
453
544
244
291
221
453
235
27 55 46 56 48 63
41 55 33
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
SP + RJ Other Markets
▲ Launches and sales focused on core markets
▲ Ongoing evolution of adjusted gross margin.
Reached 35.7% , and almost 37% in SP and RJ markets;
Gross Margin by Market (2011-1Q14) Net Revenue by Market (2011-1Q14)
▲ Operating cash generation of R$99.1 million in the 1Q14.
-80%
-60%
-40%
-20%
0%
20%
40%
60%
SP + RJ Outros Mercados
Increased gross margin and strong cash generation
Other markets
Other markets
1Q14
5
Tenda Segment
▲ Tenda’s consolidated launches totaled R$181.4 million across 4 developments, up 60% compared to 1Q13;
▲ Pre-sales totaled R$51.8 million in 1Q14;
▲ Adjusted gross profit in the period was R$15.6 million with a margin of 14.7%, above the adjusted gross result of R$1.9 million and a margin of 1.3% in 1Q13;
▲ Adjusted EBITDA was negative R$24.9 million in 1Q14 with margin of 23.5%, compared to 18.2% in 1Q13;
▲ Net loss was R$37.5 million in 1Q14, compared to R$ 43.9 million in 1Q13;
1Q14 Results
6
Tenda Segment
1Q14 4Q13 Q/Q(%) 1Q13 Y/Y(%)
Launches 181,445 88,379 105% 113,696 59.6%
Pre-sales 51,767 163,626 -68% 6,785 663.0%
Pre-sales of launches 20,256 74,587 -73% 13,656 48.3%
Sales over Supply (SoS) 6.4% 20.9% -69% 0.9% 611.1%
Delivered projects. units 1,272 2,719 -64% 795 60.0%
Net Revenue 105,951 214,897 -50.7% 140,265 -24.5%
Adjusted Gross Profit
15.563 61.214 -74,6% 1.896 720,8%
Adjusted Gross Margin¹ 14,7% 28,5% -1380bps 1,3% 1340bps
Adjusted EBITDA ² (24,913) 13,761 -281.0% (25,493) -2.3%
Adjusted EBITDA Margin ² -23.5% 6.4% 2990bps -18.2% -530bps
Net Income (Loss) (37,460) 12,457 - (43,852) -
(R$ 000 and % Tenda, except where otherwise stated)
1) Adjusted by capitalized interests
2) Adjusted by expenses with stock option plans (non-cash). minority
Operational and Financial Highlights
7
Tenda Segment
Gross Sales (1Q12-1Q14)
0 0 0 0 14
57 60 84 92
249
345
294 288
226
271
224
154 153
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
New Projetcts Legacy Projects
▲ Operational control and reliable New Business Model;
▲ Higher level of revenues derived from New Projects,
allowing a gradual recovery in Tenda’s profitability; Gross Margin (1Q12-1Q14) Net Revenues by Model (2011-1Q14)
New projects gaining greater relevance
▲ Operating cash generation of R$8.2 million
in the 1Q14.
6%
20%
16%
5%
-7.0%
7%
4%
22%
8.0%
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
114
33
104 88
181
1Q13 2Q13 3Q13 4Q13 1Q14
0% 10%
55%
100% 90%
45%
2012 2013 1Q14
New Projects Legacy
Launches of New Projects (1Q12-1Q14)
8
Launches – New Model
Main indicators of new projects
Launches performing well to date, based on small volumes Speed up launches
Novo Horizonte
SP
Vila Cantuária
BA
Itaim Paulista SP
Verde Vida F1 BA
Jaraguá SP
Viva Mais RJ
Ch. Campo Limpo
SP
Verde Vida F2 BA
Parque Rio Maravilha
RJ
Renacença Candeias
PE
Launch Date Mar/13 Mar/13 May/13 Jul13 Aug/13 Nov/13 Dec/13 Jan/14 Mar/13 Mar/13
Units 580 440 240 340 260 300 300 340 440 432
Total PSV (R$ 000) R$ 65,145 R$ 45,903 R$ 31,220 R$ 38,563 R$ 40,842 R$ 39,713 R$ 48,000 R$ 42,405 R$63,814 R$ 57,024
Sales 577 341 195 261 232 96 127 43 55 52
% Sales 99% 78% 82% 77% 89% 32% 42% 13% 13% 12%
Average SoS (Month)
7.6% 6% 7.5% 8.6% 11.1% 6.4% 10.5% 4.3% 12.3% 12.0%
Transfers 565 178 162 218 215 55 100 3 0 0
% Transfers 98% 52% 83% 84% 93% 57% 79% 7% 0% 0%
Construction 89% 86% 72% 17% 2% 12% 0% 0% 0% 0%
9
Consolidated Results
1Q14 4Q13 Q/Q(%) 1Q13 Y/Y(%)
Launches 535,379 767,534 -30.2% 196,725 172.1%
Pre-sales 239,323 618,083 -61.3% 107,901 121.8%
Pre-sales of launches 58,171 338,636 -82.8% 25,352 129.5%
Sales over Supply (SoS) 7.5% 18.5% -59.5% 3.9% 92.3%
Delivered projects. units 1,796 4,597 -60.9% 881 103.9%
Net Revenue 432,701 704,750 -38.6% 507,550 -14.7%
Adjusted Gross Profit 132.093 266.874 -50,5% 111.739 18,2%
Adjusted Gross Margin¹ 30,5% 37,9% -740 bps 22,0% 850 bps
Adjusted EBITDA ² 26,470 138,939 -80.9% 55,769 -54.2%
Adjusted EBITDA Margin ² 6.1% 19.7% -1360bps 11.4% -830bps
Net Income (Loss) (39,791) 921,284 - (55,473) -
Operational and Financial Highlights
(R$ 000 and % Gafisa, except where otherwise stated)
1) Adjusted by capitalized interests
2) Adjusted by expenses with stock option plans (non-cash). minority , 4Q13 does not consider AUSA transaction results
10
44% 30% 25%
7%
56% 70% 75%
93%
Until Mar/15 Until Mar/16 Until Mar/17 Until Mar/18
Corporate debt Project debt
2.967
985
24
474
1.011
473
Total
Investor`s obligations
Working Capital
SFH Projects Financing
Debentures Working Capital
Debentures FGTSNet Debt/ Equity 1.26x
9.54% - 10.09% (TR)
1.50% - 1.95%+CDI
8.30% - 11.50%+TR
0.235% - 0.82%+CDI/IGPM+7.25%
Indebtedness and Leverage
0.36x
1.30% - 3.04%+CDI
1.162 1.074 435 273
R$
Average cost – 10.8%
0.45x
Net Debt / Equity of 44.9%
1Q14 Leverage Post Transaction Indebtedness (R$ mm)
Debt Maturity as % of Total Debt
126%
36%
45%
252
947
1,2
(130.2)
(55.2) (63.6)
3Q13 Reversion Equity Var Cash Var 4Q13 JCP Programa deRecompra
ImpostoAUSA
1Q14
Cash Generation of R$20.5M in 1Q14
▲ (i) payment of interest on own capital in the amount of R$130.2 million;
▲ (ii) R$55.2 million disbursed in the Company`s share buyback program;
▲ (iii) R$63.6 million for tax payment from Alphaville`s stake sale operation.
11
Recent Events
General Shareholders’
Meeting
Dividend Program and Share
Buyback Program
Separation of Business Units
Approval of the Board of Directors to analyze a possible separation;
Enhancement of value creation capacity for both business units;
In this 1Q14, we took the first steps toward administrative and back office separation;
Appointment of Gafisa and Tenda CEOs.
Interest on own capital in the amount of R$130M with payment effective as of February 12, 2014;
Approval of supplementary dividend distribution of approximately R$32M;
The share buyback program in effect
had already acquired 23 million shares at the end of March, approximately 71% of the total allowed amount.
Election of new members for the Board of Directors and the Fiscal Council;
Approval of supplementary dividend distribution of approximately R$32.9M;
Establishment of up to R$13.4M
in total compensation to be paid to the Company’s management for the fiscal year 2014.
Preliminary studies and first steps
12
Separation Process – Updated Status
In this first stage, we highlight the following items:
▲ Definition of segregated corporate structures for Gafisa and Tenda;
▲ Assessment, understanding, sizing and necessary adjustments to processes and systems for separation of areas;
▲ Definition of the separation strategy, workforce, separation schedule for different areas, and major milestones on the process.
The Company continues to analyze the separation process, assessing issues relating to capital structure, liquidity, and fiscal, tax, legal, corporate aspects, among others. As previously announced, with the completion of the turnaround process and in line with the intention of separating the Gafisa and Tenda business units, Duilio Calciolari announced his intention to leave the company, after 14 years of dedicated service to Gafisa. Therefore, on May 5th, Sandro Gamba was named the new CEO of the Company. Andre Bergstein remains Chief Financial Officer and Rodrigo Osmo the CEO for Tenda.
Preliminary studies and first steps
13
