gfa 4 q11_ppt_eng_010420112_final
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Preliminary Unaudited Results 2011April 2nd, 2012
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.
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Safe-Harbor Statement
4Q11 corrective adjustments are non-cash and impact 2011 results Review of development cost budget Dissolution of contracts due to new sales strategy Impairment related to downward valuation of no longer strategic Gafisa and Tenda
land bank Other expenses
New strategic plan position targets Narrowed geographic focus Reduced risk at Tenda, relaunch under profitable model Expanded share of AlphaVille in Group mix
Existing and future liquidity to execute business plan
Highlights - Restructured organization and new strategic plan position Gafisa Group for improved financial and operating performance
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2011 adjustments derived 69% from Tenda and 31% from Gafisa 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$412 million (34%) in accordance with PoC of the related projects (79% launched<
2008)• And only remaining 6% are unrecoverable.
Note: Impairment is a result of strategy to focus in reduced markets and resulted in an adjustment equivalent to 18% of the recorded cost
Tenda 69 % Gafisa 31 %
75% of adjustment to development cost budget is derived from 3rd party construction partnerships and from launches in regions no longer part of the new narrowed geographic focus;
Cost overruns represent 8% of the Company’s original targeted cost base of R$ 7.4bn; Sales criteria at Tenda changed to diminish future dissolutions, adequate provisions taken to complete current
process.
Stake by brand
Budget Cost
revisionEffective
DissolutionsProvisions for
Bad Debt
Provisions for
dissolutionsImpairment LandBank
Provisions for Projets Delay
Project Cancellati
on
Budget Cost
revisionImpairment LandBank
Provisions for Project Delay
Net Operating Revenue 2.788.559 (227.203) (284.404) (438.913) (46.115) (213.721) Operating Costs (2.677.258) 193.227 358.913 (10.600) (38.536) 28.638 (14.988) (12.675) Gross profit 111.301 (91.177) (80.000) (17.477) OPEX (865.092) (87.314) (57.917) (37.925) Operating results (753.791) Net Interest Income (159.903) Minority Shareholders (39.679) EBT (953.373) Taxes (139.790) Lucro Líquido (1.093.163) EBITDA (489.501)
Total de Ajustes (889.532) (227.203) (91.177) (87.314) (80.000) (68.517) (38.536) (17.477) (213.721) (52.913) (12.675) Stake (%) 100% 26% 10% 10% 9% 8% 4% 2% 24% 6% 1%
2011
Tenda Gafisa
Tenda = 69% Gafisa = 31%
(R$000)
2012 Positive Operating Cash Flow – Deleveraging Strategy
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$352 mn of finished units in inventory
Well structured debt schedule
Dec/12 Dec/13 Dec/14 Dec/15 After Dec/15
45%32%
53%
55%68%
47%
100% 100%
Corporate Debt (R$ mn) Project Finance (R$ mn)
R$1.112 R$1.120 R$1.061 R$308 R$151
Leverage increased to 118.0% from 75.3%
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3.913 2.946
(1.003)
75,3%
118,0%
20099
3Q11
4Q11
Net DebtEquity
Cash BurnDividends
Equityreduction
2.7503.245
Gafisa has a well structured debt schedule and profile • 30% Short Term• Project finance now represents 46% of total debt• Competitive low rates: 109.5% CDI
473
685
1,148
708
1,214 46%
CDI+(0.72%-1.95%)
Debt Composition (R$ mm) and Rates
8.22% -10.20%(TR)
CDI
12.51%
CDI+(1.30-2.20%)
54%
Total
Investor Obligations
DebentureFGTS
SFH /
Proj. Fin. Working Capital
DebentureWorking Cap
CDI+(1.30%-1.95%)
4.228
Note: It does not include investor obligations
Accounts Receivable 2.6x Construction Obligations; Backlog Margin of 35%, or 38% excluding Tenda
Receivables Cost to be Incurred
9,499
3,716
Accounts Receivable vs Construction Obligations
(R$ billion)
Note: Revenues to be recognized are net of PIS/Cofins (3.65%); excludes the AVP method introduced by Law nº 11,638
Gafisa Tenda AlphavilleGafisa Group
Gafisa Group ex- Tenda
Revenues to be recognized 2.530 1.316 670 4.516 3.200 Costs to be recognized (1.664) (978) (315) (2.957) (1.979)Results to be recognized 866 338 355 1.559 1.221 Backlog margin 34,2% 25,7% 53,0% 34,5% 38,2%
Results to be recognized by Segment (R$ million)
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Gafisa is well prepared to face current challenges
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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
Growth Hurdles
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
Gafisa Segment 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
Achievements1 2
Outlook
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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 10.000 – 14.000 customers to financial institutions
Achievement 1Q12 % Consolidated Launches¹ R$2.7-R$3.3 bi R$450 MM 15%Operacional Cash Flow R$500-R$700 MM neutral 0%¹ (50% Gafisa, 10% Tenda, 40% Alphaville)
Achievement 1Q12 % Units delivered 22.000 - 26.000 6.000 25%Customers Transferred Tenda¹ 10.000 - 14.000 2.500 21%¹ Customers transfered to finantial institutional
Guidance 2012
Other Relevant Operacional Indicators