4q07 presentation
TRANSCRIPT
1
2007 Full Year and Fourth Quarter ResultsEarnings Release and Supplemental Financial Information
Parc Paradiso – Belém (PA)
Investor Relations Contact:
Duilio Calciolari
CFO and IR Officer
2
Overview of 2007 and 4Q07 results - Wilson Amaral, CEO
Financial and Operational Performance
3
Highlights of the Year
Consolidated Launches increased 122% over 2006
Launches increased to R$2,236 million in 2007 from R$1,005 million in 2006
Pre-sales increased 63% y-o-y
Pre-sales increased to R$1,627 million in 2007 from R$995 million in 2006
Net Operating Revenues rose 77% y-o-y
Net operating revenues increased to R$1,172 million in 2007 from R$664 million in 2006
2007 EBITDA, adjusted for public offering expenses, reached R$184 million (15.7% adjusted
EBITDA margin) a 87% increase y-o-y
Net Income, adjusted for public offering expenses, increased 89%
Adjusted net income increased to R$144 million in 2007 from R$76 million in 2006
Backlog of results reached R$583 million in 4Q07
96% increase compared to the R$298 million in 4Q06, with a 4Q07 backlog margin of 38.2%
Gafisa’s land bank totaled R$10.2 billion, 15% growth over 3Q07
4
Highlights of the Quarter
Consolidated Launches increased 176% over 4Q06
Launches increased to R$1,036 million in 4Q07 from R$375 million in 4Q06
Pre-sales increased 75% q-o-q
Pre-sales increased to R$662 million in 4Q07 from R$379 million in 4Q06
Net Operating Revenues rose 56% q-o-q
Net operating revenues increased to R$373 million in 4Q07 from R$238 million in 4Q06
4Q07 EBITDA reached R$61 million (16.5% EBITDA margin) a 101% increase q-o-q
Net Income increased 326%
Net income increased to R$63 million in 4Q07 from R$15 million in 4Q06
Launches in 2 new markets: Volta Redonda and Rezende in the state of Rio de Janeiro
5
Recent Developments
Bairro Novo successfully launched its first project in 4Q07
Fit launched 10 developments since inception in March 2007 comprising 2,459units (Gafisa’s stake) and a potential sales value of R$263 million in the statesof São Paulo, Bahia, Maranhão, Goiás and Pará
Gafisa Vendas is the main vehicle of sales for Gafisa products in the marketswere it operates, São Paulo and Rio de Janeiro
25,3
16,3
6,06,9
10,4
2,2 3,0
18,4
3,83,9
5,5
7,0
6,9
4,9
9,3
2003 2004 2005 2006 2007
Mortgages using resources from FGTSMortgages using resources from SBPE
6Sources: ABECIP, Central Bank of Brazil, CEF and FGV.
Housing Credit (R$ billion)
1.60.7
Jan.07 Jan.08
Mortgages using
resources from SBPE
Mortgage Lending Expanding Rapidly
Strong growth in mortgage lending still does not meet pent-up demand
• FGTS funds can now be used to finance
mortgages of up to R$245 thousand
• CEF increases mortgage tenors to 30 years.
131%
+57%
+51%
+15%
3%
36%
41%
63%90%
27% 98%
187
235
2006 2007
Saving Deposits (R$mn)
26%-1%
+55%
CAGR (2003-2006): 40%
7
Increasing Commercial Mortgage Penetration
16%34%
64%30%
32%
20%54%
34%16%
2005 2006 2007
Gafisa direct financing longer than 36 months
Gafisa direct financing up to delivery of keys
Mortgage Loans
Gafisa is benefiting from higher mortgage availability and is working with banks to
develop innovative mortgage products
Sales financed by Gafisa vs financed by Banks
Reduction in accounts receivables duration, improves Gafisa’s working capital
Higher returns
Higher asset turnover
Improving terms for clients with lower rates and longer payment periods
8
Delivering on Growth Strategy: Strong Launches
Launches (R$ million)
76%
11%
12% 2%
Gafisa
AlphaVille
Fit Residencial
Bairro Novo
240401
497
773
157
69
151
273
427
83
134
368 233
742
64
4T06 4T07 2006 2007
New Markets
Other Rio de Janeiro
Rio de Janeiro Metropolitan Area
Other São Paulo
São Paulo Metropolitan Area
375
1.036 1.005
2.236
122%
176%
9
253 206
666 634
52
335
32
64
286
541
246
12478
81
4Q06 4Q07 2006 2007
New Markets
Other Rio de Janeiro
Rio de Janeiro Metropolitan Area
Other São Paulo
São Paulo Metropolitan Area
Delivering on Growth Strategy: Strong Pre-sales
Pre-sales (R$ million)
75%
379
662
995
1,627
63%
82%
15% 1%3%
Gafisa
AlphaVille
Fit Residencial
Bairro Novo
10
118 projects under construction in 15 different states
One of the Most Geographically Diverse Homebuilder already
present in 18 states
Riviera de Ponta Negra – Manaus (AM)
*States in which Gafisa or its subsidiaries already launched projects.
11
Gafisa has a Diversified, High-Quality Land Bank
136 different sites, all over the country
CompanyPotential Units
100%
Potential Units
% Gafisa
Future Sales
%Gafisa
(R$ bn)
Swap
Agreements %
Gafisa 21,765 16,994 5,729 63%
AlphaVille 37,092 20,536 2,930 97%
Fit Residencial 13,271 10,309 973 12%
Bairro Novo 18,143 9,072 563 77%
Total 90,271 56,911 10,195 82%
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Our Product Lines: Focused Management Teams for Each Market
Mid, Mid High ang
High
Vertical
Metropolitan areas
Financing: Banks
Unique Projects
Unit Prices: >
R$200K
60% owned by Gafisa
Mid High and High
Horizontal (lots)
Outside Metropolitan
areas
Financing: direct
Unique Projects
Unit prices: R$70K –
R$500K
100% Gafisa
Affordable Entry Level
Horizontal/Vertical
Metropolitan Areas and
Outskirts
Financing: CEF and
Banks
Standardized Projects
Unit Prices: R$80K –
R$200K
50/50 JV with Odebrecht
Low Affordable Entry
Level
Horizontal / Vertical
Metropolitan areas and
Outskirts
Financing: CEF and
Banks
Standardized Projects
Unit Prices: < R$100K
Own sales force
In São Paulo and Rio de
Janeiro
Selling Machine
Management of
Channels & CRM
Management of
Outsourced & Local SC
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Our Differentials
Professional
Management
and Established
OrganizationWorld-class
Shareholders
and the Highest
Standards of
Corporate
Governance
Growth Through
Product
Diversification
Industry Leadership and
Strong Brand
Recognition
Geographic
Diversification
Supported by Strategic
Land Bank
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Financial and Operational Performance – Duilio Calciolari, CFO
Overview of 2007 and 4Q07 results
15
Interest Capitalization
Consolidated2007
Pre AdjustmentAdjustment
2007Post Adjustment
Net Revenues 1,172 1,172
Cost of Goods Sold -785 -12 -797
Gross Profits 387 -12 ¹ 375
Gross Margin 33.0% 32.0%
EBITDA 195 -12 184
EBITDA Margin 16.7% 15.7%
Financial Result -18 33 ² 14
Taxes -24 -7³ -31
Adjusted Net Income¹ 130 14 144
Adjusted Net Margin¹ 11.1% 12.3%
Adjusted EPS¹ 1.04 1.15
Targeting the best accounting practices….
…. now we recognize interest from corporate debt on a POC basis on COGS
¹ Interest recognized through the POC method
² Total interest capitalized
³ Deferred income tax effect over net adjustment
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FY2007 and 4Q07: Operating Highlights
198134
67 0
375
36.1%
28.3%29.8%
32.0%
4Q06 4Q07 2006 2007
Gross Profit Gross Margin
6131
184
098
16.5%15.7%
14.8%
12.8%
4Q06 4Q07 2006 2007
Adjusted EBITDA Adjusted EBITDA Margin
Net Revenues (R$ million) Gross Profit (R$ million)
Adjusted EBITDA¹ (R$ million)
664
1172
238373
4Q06 4Q07 2006 2007
Net Revenues
56%
77%
100%
89%
101%
87%
Adjusted Net Income¹ (R$ million)
63
144
760
15
16.9%
11.4%
6.2%
12.3%
4Q06 4Q07 2006 2007
Adjusted Net Income Adjusted Net Margin
326%
89%
¹ Adjusted for IPO and Follow on offering expenses
17
Strong Pre-Sales Positively Impact Backlog
R$583 million of results to be recognized (96% growth compared to 2006)
4Q07 3Q07 4Q06 4Q07 x 3Q07 4Q07 x 4Q06
Sales to be recognized—end of period 1,527 1,209 795 26.3% 92.0%
Cost of units sold to be recognized - end of period (943) (744) (498) 25.4% 87.0%
Backlog of Results to be recognized 583 465 298 25.4% 95.6%
Backlog Margin - yet to be recognized 38.2% 38.5% 37.5% -0.3% 0.7%
18
Current Revenues Come From Previous Years’ Sales
45 0 61179
35102
0
137
442
35
120
0
290
360
583
0
192
10
1.139
107
0
200
400
600
800
1.000
1.200
1.400
4Q07 Pre-Sales 4Q07 Revenues 2007 Pre-Sales 2007 Revenues
Launched up to 2004 Launched in 2005 Launched in 2006 Launched in 2007
93%
61%
88%47%
662
373
1,627
1,172
88% of the 2007 sales come from projects launched after 2006….
… but only 47% of the 2007 revenues come from those projects
19
Gafisa’s Operation is Highly Efficient
We have gained productivity in terms of selling expenses…
G&A Expenses 2007 2006
Selling Expenses / Launches 3.6% 5.1%
G&A Expenses / Launches 5.1% 5.2%
SG&A / Launches 8.6% 10.3%
Selling Expenses / Sales 4.9% 5.2%
G&A Expenses / Sales 7.0% 5.2%
SG&A / Sales 11.8% 10.4%
Selling Expenses / Revenues 6.8% 7.8%
G&A Expenses / Revenues 9.6% 7.9%
SG&A / Revenues 16.4% 15.6%
Deferred selling expenses 2007 2006
Deferred Selling Expenses / Launches 1.7% 1.7%
Deferred Selling Expenses / Sales 2.3% 1.7%
Deferred Selling Expenses / Revenues 3.2% 2.6%
…Gafisa adopts one of the most conservative accounting practices in the industry
20
Strong Financial Position
Gafisa is prepared to deliver on its aggressive growth strategy…
4Q07 4Q06 3Q07
Short Term Debt 69 28 34
Long Term Debt 621 267 343
Total Debt 689 295 377
Cash and Cash Equivalents 514 266 372
Net Debt (Net Cash) 175 29 4
Shareholder’s Equity 1,531 814 1,493
Total Capitalization 2,220 1,110 1,870
Net Debt / Equity 11.4% 3.6% 0.3%
… with only 11% of net debt to equity ratio
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Our Shares
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-510152025303540
Volume (R$ MM - LHS) Price (R$ - RHS)
NYSE Listing: Gafisa is the only Brazilian Homebuilder to
have an ADR program
Stock has highest trading volume of
any company in real estate sector
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Average daily volume in Feb.08 (R$ M M - LHS) M arket Cap (R$ M M - RHS)
Stock performance
Since the IPO: 79% from R$18.50 to R$33.05 (Feb 2008)
Since the Follow on: 27% from R$26.00 to R$33.05 (Feb 2008)
22
Outlook for 2008
Launch guidance for 2008 of R$3.0 billion
R$ 2.0 billion from Gafisa’s core business
R$ 700 million from Fit Residencial and Bairro Novo
R$ 300 million from AlphaVille
EBITDA margin guidance of 16-17% for 2008
23
“Safe-Harbor” Statement
We make forward-looking statements that are subject to risks and uncertainties. These statements are based onthe beliefs and assumptions of our management, and on information currently available to us. Forward-lookingstatements include statements regarding our intent, belief or current expectations or that of our directors orexecutive officers.
Forward-looking statements also include information concerning our possible or assumed future results ofoperations, 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-lookingstatements are not guarantees of performance. They involve risks, uncertainties and assumptions because theyrelate to future events and therefore depend on circumstances that may or may not occur. Our future results andshareholder values may differ materially from those expressed in or suggested by these forward-lookingstatements. Many of the factors that will determine these results and values are beyond our ability to control orpredict.
240401 497
773
157
427
83
134
368 233
742
273
64
4T06 4T07 2006 2007
New Markets
Other Rio de Janeiro
Rio de Janeiro Metropolitan Area
Other São Paulo
São Paulo Metropolitan Area