April 23 th, Gafisa Presentation

Transcription

1 April 23 th, 2012 Gafisa Presentation

2 Agenda Expansionary Phase Growth Hurdles and Achievements New Strategy Operational Review Current Liquidity Appendix 2

3 Agenda Expansionary Phase Growth Hurdles and Achievements New Strategy Operational Review Current Liquidity Appendix 3

4 Geographic & Income Segment Expansion The acquisitions of Tenda and AlphaVille broadened Gafisa s footprint beyond the mid to high-income segments in SP and RJ to encompass every income segment 2010: New Follow-On: R$ 1 billion; Increase in Alphaville stake from 60% to 80% 4, : YE Implementation of a Strategic Plan 2008: Acquisition of a 60% stake of Tenda 3,248 3, : GP Investimentos acquires control of Gafisa : Equity International Acquires 36% of Gafisa : Company IPO (R$494 mm of primary proceeds; Acquisition of 60% of Alphaville : ADR issuance First follow-on: R$488 mm of primary proceeds 1,627 2,578 Contracted Sales (R$ MM) 2009: Acquistion of the remaining 40% of Tenda; R$600 mm in FI-FGTS debentures (May/09) R$600 mm in FI-FGTS debentures (Dec/09)

5 Agenda Expansionary Phase Growth Hurdles and Achievements New Strategy Operational Review Current Liquidity Appendix 5

6 Growth Hurdles & Achievements Geographic expansion and the Tenda acquisition increased complexity of business Corrective measures have redirected Gafisa s growth trajectory and financial performance AlphaVille has exceeded initial expectations Growth Hurdles Replication of SP and RJ returns in other regions challenging Local market characteristics make management complex Capacity of suppliers to adequately absorb velocity of growth Deviation from budgeted costs and impact on speed of revenue recognition Regional diversification and Tenda legacy created cost overruns Tenda challenges related to sales dissolutions and credit quality More stringent vetting means many customers no longer qualify for bank mortgages High capital employed, especially in accounts receivable related to Tenda s legacy portfolio Achievements Gafisa operations in São Paulo and Rio de Janeiro High ROE High quality operating indicators Long-standing reputation Successful expansion of the AlphaVille model High ROE Growing product mix contribution Significant brand awareness Progress with the Tenda business Record units delivered in 2011 Reinforced relationship with CEF Introduced aluminum mold technology Increased sales platform 6

7 Agenda Expansionary Phase Growth Hurdles and Achievements New Strategy Operational Review Current Liquidity Appendix 7

8 Strategic Overhaul Restructured organization and new strategic plan position Gafisa for improved financial and operating performance Focus Gafisa launches on core São Paulo and Rio de Janeiro markets Strong brand recognition and regional awareness ensure prominent market position is maintained Capital allocation: SP and RJ where competitive advantages exist Improve working capital cycle at Tenda Launch only contracted developments where mortgages can be immediately transferred to financial institutions Lower volume of launches and remedied construction process Conservative capital allocation Maintain the momentum at AlphaVille Sustain growth rate and expand contribution in the product mix Capital allocation: To maximize growth 4Q11 corrective adjustments impacted 2011 results but cash flow not affected 70% related to Tenda, represents 8% of total cost budget base Gafisa & Tenda geographic presence restricted to markets possessing strong supply chains and established relationships Recognized cost overruns due to increased volume of units delivered 2011 Dissolution of contracts among Tenda clients unqualified for bank financing New management team, including CFO, ensures strong leadership to drive future growth Existing and future liquidity to execute business plan 8

9 New organizational structure to execute plan & facilitate growth 9

10 Agenda Expansionary Phase Growth Hurdles and Achievements New Strategy Operational Review Current Liquidity Appendix 10

11 PRE-SALES LAUNCHES Launches and Sales Performance Launches % 28% 61% Gafisa Alphaville Tenda Launches 2010 Launches 1Q12 4Q11 QoQ 1Q11 YoY Gafisa Segment % 228-6% Alphaville Segment % % Tenda Segment - (103) nm 102 nm Total % % 36% 48% 16% Pre-Sales % 25% 65% Gafisa Alphaville Tenda Pre-Sales 2010 Pre-sales 1Q12 4Q11 QoQ 1Q11 YoY Gafisa Segment % % Alphaville Segment % 171 6% Tenda Segment (90) (219) nm % Total % % Gafisa Alphaville Tenda 36% 49% 15% Gafisa Alphaville Tenda 11

12 Growing Volume of Deliveries Gafisa delivered 118 projects / phases and22,679 units during 2011, representing R$3.7 billion in PSV Gafisa: 34 projects/phases. 5,593 units, R$1.9 billion Alphaville: 12 projects/phases, 2,624 units, R$530 million Tenda: 74 projects/phases, 14,462 units, R$1.3 million Chart 1. Delivered units (2007 1Q12) PSV R$1.1bn 1Q 2Q 3Q 4Q Full year PSV R$3.7bn PSV R$1.7bn Gafisa delivered 34 projects / phases and 6,165 units during 1Q12, representing R$1.1 billion in PSV Gafisa: 13 projects/phases. 2,715 units Alphaville: 3 projects/phases, 994 units Tenda: 18 projects/phases, 2,456 units 12

13 Sufficient Land Bank to Execute Strategy & Non-Strategic LB to Improve Cash Flows Combination of AlphaVille s sizable land bank with Gafisa s strategic reserves PSV - R$ million (%Gafisa) %Swap Total %Swap Units %Swap Financial Potential units (%Gafisa) Potential units (100%) Gafisa* São Paulo ,6% 31,4% 2,2% Rio de Janeiro ,5% 44,5% 0,0% Total ,2% 34,6% 1,7% Alphaville São Paulo ,5% 0,0% 98,5% Rio de Janeiro ,0% 0,0% 100,0% Other ,5% 0,0% 98,5% Total ,7% 0,0% 98,7% Tenda* São Paulo ,2% 31,3% 0,9% Rio de Janeiro ,9% 18,9% 0,0% Nordeste ,0% 0,0% 0,0% Minas Gerais ,8% 28,5% 23,3% Total ,3% 26,4% 5,9% Total São Paulo ,4% 31,3% 2,0% Rio de Janeiro ,2% 39,9% 0,3% Other ,8% 19,7% 18,1% Total ,2% 31,7% 3,5% Gafisa Segment Land bank Alphaville Segment Land bank Tenda Segment Land bank 21% 79% SP RJ 74% 16% 10% SP RJ Other 9% 17% 25% 49% SP RJ Northeast MG 13 Note 1: Potential Sales Value. 2: 3Q11 acquisitions breakdown: 65% swap and 35% in cash

14 Agenda Expansionary Phase Growth Hurdles and Achievements New Strategy Operational Review Current Liquidity Appendix 14

15 2012 Positive Operating Cash Flow Deleveraging Strategy Gafisa has a well structured debt schedule and profile 30% Short Term Project finance now represents 46% of total debt Competitive low rates: 109.5% CDI 2012 expected operating cash flow of R$500-R$700 million Sufficient liquidity to execute our development plans ~R$1bn cash + R$500 mn available for securitization + R$352 mn of finished units in inventory 15

16 Revenue & Margin Visibility Accounts Receivable 2.6x Construction Obligations; Backlog Margin of 35%, or 38% excluding Tenda Accounts Receivable vs Construction Obligations (R$ billion) Results to be recognized by Segment (R$ million) 16

17 Progress Towards 2012 Guidance Company expects to generate between R$500 million and R$700 million in operating cash flow for the full year of 2012 Launches for 2012 are expected to be between R$2.7 and R$3.3 billion The Gafisa Group plans to deliver between 22,000 and 26,000 units in 2012 broken down by 30% Gafisa, 50% Tenda and 20% AlphaVille We expect to transfer between customers to financial institutions Guidance 2012 Achievement 1Q12 % Consolidated Launches¹ R$2.7-R$3.3 bi R$450 R$464MM MM 15% Operacional Cash Flow R$500-R$700 MM neutral 0% ¹ (50% Gafisa, 10% Tenda, 40% Alphaville) Other Relevant Operacional Indicators Achievement 1Q12 % Units delivered % Customers Transferred Tenda¹ % ¹ Customers transfered to finantial institutional 17

18 Agenda Expansionary Phase Growth Hurdles and Achievements New Strategy Operational Review Current Liquidity Appendix 18

19 Alphaville successful business model Differentiated Business for Residential Land Communities Concept Alphaville Competitive advantages Alphaville Residential land communities with lots over 360m² Ticket over R$100 thousand High quality infra-structure Terras Alpha Residential land communities with lots from 250m² to 360m² Average ticket of R$75 thousand Optimized infrastructure leveraged by Alphaville brand Low capital employment Partnership contracts via land swap Construction only after pre-sales Accelerated receiving flow 20% upfront; 70% during the construction High sales velocity 70% of units sold at launching date; over 90% sold before the completion of the project Steady growth track record CAGR % ROCE (%) High profitability Limited competition due to high barriers to entry the segment Wide experience in complex project approval process Solid brand awareness Better access to new land bank (Land owners trust in Alphaville as their partners) Allow selling with prices 20-40% superior than closest competitor 19

20 20 New Tenda business strategy aimed at profitable development; initial reduction in scope of operations Launches Sales Construction Actual Tenda Launches with every step concluded Tenda Fundamentals Launches only when the project is contracted with CEF Credit analysis based on CEF criteria Sales recognition only in repasse 100% of projects self constructed; Mix of technologies: masonry x aluminum molds 100% aluminum molds Minimum scale and recurrence (mín. 500 per type/year) Rational It is a necessary condition to do the Repasse after the sale CEF is used to do non programed demands (ex.: projects modification.) Major focus in contracting with CEF. Operational Cost 4 months delay on the launch Not generating accounts receivables and cancellations Improvement in the quality of portfolio of receivables 1 month delay on sales recognition Tenda does not master the process of structural masonry Cost, control and project cycle of the aluminum molds are far superior, since they are used in scale. Necessity of building in specific land bank 20

21 2011 adjustments derived 77% from Tenda and 23% 21from Gafisa (R$000) Non-cash nature charges will lower earnings in the period due to the total net adjustments of R$889 million in the 4Q11 (; 50% based on budget review, remaining due to change in strategy; Revenue reversal totaled R$1.2 billion (18% Gafisa and 82% Tenda) We expect to rebook ~ R$723 million (60%) of revenue reversal, with resale of returned units We expect to rebook ~ R$412 million (34%) in accordance with PoC of the related projects (79% launched< 2008) And only remaining 6% are unrecoverable. 75% of adjustment to development cost budget is derived from 3rd party construction partnerships and from launches in regions no longer part of the new narrowed geographic focus; Cost overruns represent 8% of the Company s original targeted cost base of R$ 7.4bn; Sales criteria at Tenda changed to diminish future dissolutions, adequate provisions taken to complete current process. Note: Impairment is a result of strategy to focus in reduced markets and resulted in an adjustment equivalent to 18% of the recorded cost 21

22 The concept of the cost overrun 22 Real Estate accounting bases revenue recognition in PoC ( Percentage of Construction ) Total construction cost is estimated before project is launched and revenues are recognized according to the % already incurred of total construction cost Any total construction cost revision during the project impact the velocity that revenues could have been recognized in results Company needs to rewind part of revenues recognition due to a most incipient PoC than previously assumed (Rewind causes no cash impact. Only cash impact is the project cost overrun) Generic example 1. Original Budget (A) 1 Total Construction Cost: 400 (B) 1 Cost already incurred: 250 (C) 1 = (B) 1 / (A) 1 PoC: 63% (D) 1 PSV sold: 800 (E) 1 = (D) 1 * (C) 1 Revenues recognized: 500 (F) 1 = (A) 1 / (D) 1 Project margin: 50% 2. Revised Budget (A) 2 Total Construction Cost: 450 (B) 2 Cost already incurred: 250 (C) 2 = (B) 2 / (A) 2 PoC: 56% (D) 2 PSV sold: 800 (E) 2 = (D) 2 * (C) 2 Revenues recognized: % (F) 2 = (A) 2 / (D) 2 Project margin: 44% Cost overrrun: Cost increase cash impact (A) 1 (A) 2 = 50 Revenue rewind: Cost increase impact on earnings (E) 1 (E) 2 = (56) 22

23 Reconciliation of cost adjustments A detailed budget review identified adjustments that relate to the 2010 FY, but which were not detected by internal controls that year Cost adjustments primarily relate to operational issues stemming from relationships with franchisees, partners and contractors, revisions to vendor contracts and modifications to projects Management apportioned costs to the 2010 financial year according to whether: Construction launched in 2010 was more than 50% complete by 2011; Construction was brought in house in 2010 following budget overruns related to the use of contractors, partners and franchisees; Additional costs incurred were for projects delivered in the first quarter of 2011 related to projects launched in 2010; Projects whose costs were higher than budgeted had their foundations laid in 2010 Additional reclassifications were made to better compare the 2011 and 2010 financial statements (ie. reclassificaiton of deferred tax accounting from accrual to cash basis, advances for future capital increase, brokerage deductions from revenue, presentation of balance and net deferred tax per segment and short and long term receivables. Consolidated Preliminary Unaudited 2011 Results and Audited 2010 Results (April 2 nd, 2012) 12/31/ /31/2010 Net Income Equity Net Income Equity Adjustments - Relocation of Construction Cost Adjustment 2011 to Supplementary Provision for Bad Debt Taxes Audited 2011 Results and Restated 2010 Results (April 9, 2012)

24 Modification of Certain Debt Covenants 24 Debt Covenants Following the modification of certain debt covenants, per the agreement with debt holders, Gafisa avoided triggering covenants and remained in compliance with all debt covenants. Covenant Ratios Table 42 - Debenture covenants - 7 th emission / 8 th (Total receivables + Finished units) / (Total debt - Cash - project debt) >2 or <0 14.3x (Total debt - SFH Project debt Debt - Cash) Cash) / Equity / Equity 75% 75% 31.8% New Covenant = Total receivables + Revenues to be recognized + Inventory of finished units / Net debt + Obligations related to construction + costs to be incurred > 1,5 1.73x Table 43 - Debenture covenants - 5 th emission (R$250 million) New Covenant = (Total debt Project Finance debt - Cash) / Equity 75% 31.8% New Covenant = (Total receivables + Finished units) / (Total debt) 2.2x 2.6x Note: Covenant status on December 31, Q11 4Q11 24

25 Launches, Contracted Sales and Revenues 25

26 EBITDA, Net Income and Results to be Recognized Margin Before IFRS (%) 26

27 Annual and Extraordinary Shareholders Meeting Annual and Extraordinary Shareholders Meeting are convened to be held together, on first call, on May 11, 2012 Agenda: Approval of Company s Financial Statements of the fiscal year ended December 31, 2011; Election of Board of Directors; Election of Fiscal Council; Approval of global compensation of Administrators and Fiscal Council for 2012; and Amendment of Bylaws. 27

28 Management Proposal Board of Directors Board members subject to reelection: Caio Racy Mattar Gerald Dinu Reiss Henri Philippe Reichstul Mr. Mattar currently holds the position of Senior Vice President of Companhia Brasileira de Distribuição (CBD - Grupo Pão de Açúcar), company listed at Bovespa and NYSE. He is also president of the Board of Directors of Pontofrio.com Comércio Eletrônico S.A. and member of Board of Directors of Sendas Distribuidora S.A. and Paramount Têxteis Indústria e Comércio S.A. Mr. Mattar is graduated in civil engineering and coursed the ADP post-graduation at London Business School. Mr. Reiss is an electrical engineer graduated by Escola Politécnica da Universidade de São Paulo, with MBA and PHD in business administration by Berkeley UC (University of California). He held positions as Planning Officer of Metal Leve, teacher of Management and Business Planning at Fundação Getulio Vargas - FGV, Development and Planning Officer and member of Executive Committee of Ultra Group, co-founder and Officer of Consemp and, in was a member of the Board of Directors of Caemi, Petrobras, Odontoprev, Comerc and Pão de Açúcar. Mr. Reichstul is graduated in economy by USP and post-graduated in economy by Hetford College University of Oxford, and he is a senior executive with a career developed in the public and private sector and lots of experience as Independent Board member. His career includes important positions such as President of Petrobras ( ), Globopar (2002) and Brenco ( ), and as member of Board of Directors of Pão de Açúcar Group, Vivo, TAM and Petrobras, among others. Currently Mr. Reichstul holds positions as member of the Board of Directors at Credit Agricole Group, Repsol YPF, Peugeot-Citroen do Brasil and Ashmore Energy International. 28

29 Management Proposal Board of Directors Board members subject to reelection: José Écio Pereira Maria Letícia de Freitas Costa Odair Garcia Senra Mr. Pereira is graduated in business administration by Fundação Getúlio Vargas accountancy by Faculdade São Judas Tadeu. He is the founder partner of JEPereira Consultoria em Gestão de Negócios, holds positions in Audit Committees and Board of Directors of public companies and others such as BrMalls, Fibria, Noster Group and Princecampos. He was auditing-partner at Deloitte Touche Tohmatsu in Brazil. Ms. Costa is graduated in production engineer by USP and MBA by Cornell University. She is an Officer with a career focused on strategic consultancy, working at Booz Allen for 24 years, starting as Senior Consultant at the London offices, Vice-President and later on partner of São Paulo office and finally as president of Booz Allen Brazil. In 2010 Ms. Costa has left Booz Allen and opened its own consultancy company Prada Assessoria, and currently she also holds position as member of the Board of Directors of Localiza, Sadia and Technip and is the Officer of Graduation of Insper Instituto de Ensino e Pesquisa. Mr. Senra has worked for Gafisa for more than 40 years and currently holds the position of Institutional Relations Officer and member of the Board of Directors of the Company. He is graduated in civil engineering by Escola de Engenharia Mauá Instituto Mauá de Tecnologia (IMT). He was a teacher of Hydraulic and Sanitation at IMT and currently holds position as Officer of Secovi since 2005, Vice President of Sinduscon-SP since 2006, representative of Sinduscon-SP at Câmara Técnica de Legislação Urbanística (CTLU), member of the Board of Directors of IMT and member of the Consulting Committee of FIABCI/Brasil. 29

30 Management Proposal Board of Directors New Board members: Ricardo Campos Ariani Rodolpho Amboss José Guimarães Monforte Mr. Ariani is a lawyer graduated by Faculdade de Direito da Universidade de São Paulo, specialized in Human Resources and Business Administration by Fundação Getúlio Vargas - FGV. He is administrative partner (CEO) of Tozzini Freire Advogados and he was a statutory Vice President of Sharp S.A. and member of the Board of Directors of Companhia do Metrô de São Paulo and CPTM Companhia Paulista de Trens Metropolitanos. Mr. Amboss is a Co-Founder and Managing Director of Silverpeak Real Estate Partners holding the position of Global Chief Financial Officer. Previously, Mr. Amboss was a Managing Director and Principal of Lehman Brothers Real Estate Partners responsible for global financial and risk management. He joined Lehman Brothers in 1997 and, prior to joining the Real Estate Private Equity Group, was involved in a number of financial advisory assignments, strategic/m&a and capital markets transactions for both private and public clients. Prior to joining Lehman Brothers, Mr. Amboss worked for Gafisa and has over 23 years of experience in the acquisition, development, operation, financing and risk management of commercial and residential real estate worldwide. Mr. Amboss received a B.Sc. in Civil and Construction Engineering from Universidade Federal do Rio de Janeiro, Brazil and an M.B.A. from the University of Chicago s Booth School of Business. Mr. Monforte is graduated in economy by Universidade Católica de Santos. In 1979, he was nominated as Executive Officer of Merrill Lynch. In 1988, he started at Citibank N.A as Private Bank Officer of the Brazilian branch, transferred in 1991 to the New York branch as administrator responsible for the Product Development area for the Occident division. In 1994 he returned to Brazil to be head of Capital Market Office. He is/was also member of Board of Directors of companies such as Natura Cosméticos S.A., Agrenco Ltd., Vivo S.A., Raia Drogasil S.A., SABESP, Banco Nossa Caixa S.A. and JHSP Participações S.A. 30

31 Management Proposal Board of Directors The slate has all necessary competencies and the new candidates bring additional and complementary experiences: BOARD MEMBER APPOINTED REAL ESTATE INDUSTRY EXPERIENCE EXECUTIVE MANAGEMENT LEGAL AND REGULATORY EXPERIENCE FINANCE AND ACCOUNTING EXPERIENCE BOARD EXPERIENCE INTERFACE WITH INVESTIDORS FINANCIAL SECTOR EXPERIENCE Caio Racy Mattar P P P P Gerald Dinu Reiss José Écio Pereira da Costa Júnior P Henri Philippe Reichstul P P P P P Maria Letícia de P P P P Freitas Costa Odair Garcia Senra P P Rodolpho Amboss P P P Ricardo Campos Caiuby Ariani P P José Guimarães Monforte P P P P P P P P P P 31

32 Management Proposal Fiscal Council Effective members subject to election: Olavo Fortes Campos Rodrigues Junior Adriano Rudek de Moura Luis Fernando Brum de Melo Mr. Rodrigues has initiated his career at Arthur Andersen in the areas of auditing and consulting. He has professional experience in the management of companies in the services, industry and retail business, working for Carrefour, Pepsi-Cola and Alcoa Brazil and Argentina. In the past 5 years he has held the positions as CEO of Grupo Siciliano, Superintendent Officer for Grupo Papaiz, member of the Fiscal Council for Duke Energy International, Geração Paranapanema S.A., member of Board of Directors for Renova Energia S.A. and Partner Officer of OREA Consultoria Empresarial. In the past 5 years Mr. Moura has held positions as Administrative and Chief of Finance Officer, and currently holds the position of Administrative, Finance and Investor Relations Vice-President of Electrolux do Brasil S.A.. He is also Chief Financial Officer of Electrolux for Latin America and member of Board of Directors of CTI Compañia Tecno Industrial S.A., located in Chile. Mr. Melo has buitl his career in Caixa Econômica Federal and currently holds a position of Relationship Manager and Executive Manager. He is also a member of the Board of Directors for Ijuí Energia S.A., company of Alupar Investment group, in charge of implementation of São José Hydro electrical Plant (UHE), in Rio Ijuí, in the Northeastern region of Rio Grande do Sul State. 32

33 Global Compensation Global compensation for Administrators: the proposal is 2012 global compensation of the management to be fixed in a limit of up to R$17 million, which includes fixed and short-term variable remuneration of management and benefits incurred or supported by the Company. This amount does not include any payroll charges or costs associated to the recognition of fair value of stock option plans eventually granted by the Company, previously approved by the shareholders The AGM held in 2011 approved a global remuneration of R$12.3 million, but only R$5.1 million were realized and the difference is due to the non payment of short-term variable compensation in view of the fact that the Company did not reach the goals set for the period Global compensation for Fiscal Council: the proposal is 2012 global compensation of the Fiscal Council to be fixed in a limit of up to R$242 thousand. 33

34 Amendment of Bylaws Article 5: in order to reflect capital increases approved by the Board of Directors, within the limit of the authorized capital of the Company, up to the date of the Shareholders Meeting; Article 19, 1 st : in order to reflect in the Bylaws the possibility of leaving open a seat in the Board of Directors in case of vacant member. These amendment adapts the Bylaws to the local legislation; Articles 27, 30, 31 and 32: to adapt the description of positions and job descriptions of member of the Board of Officers, in accordance to new strategic planning suggested by the Board of Directors; Remaining Articles: all the remaining articles changes are proposed to reflect the Bylaws to the new Novo Mercado Regulations. 34