earnings release presentation - second quarter 2008 (2q08)

27
Presentation of 2Q08 Results August 14 th , 2008

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Page 1: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Presentation of 2Q08 ResultsAugust 14th, 2008

Page 2: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Consistent and Solid Operating IndicatorsConsistent and Solid Operating Indicators

2

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ate

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ate

Equi

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ansa

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Rubens Menin – CEO

218.5 254.3

513.2

691.5

797.7

2Q07 3Q07 4Q07 1Q08 2Q08

PSV R$ millions  (%MRV)

Avg. GrowthRate *↑ 38.2%

145.8 191.0

249.8

340.1

480.7

2Q07 3Q07 4Q07 1Q08 2Q08

Sales R$ millions  (%MRV)

Avg. Growth Rate *↑ 34.7%

80.3

113.3 128.9

184.0

277.1

2Q07 3Q07 4Q07 1Q08 2Q08

Net Operating Revenue R$ millions

Avg. GrowthRate *↑ 36.3%

17.5

31.4 32.1

44.4

68.8

2Q07 3Q07 4Q07 1Q08 2Q08

EBITDA R$ millions  **

Avg. GrowthRate *↑ 40.8%

Page 3: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Consistent GrowthConsistent Growth

3

.

Page 4: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Comments on the 2Q08Comments on the 2Q08

4

Leonardo Corrêa – Executive Vice-President and Investor Relations Officer

Page 5: Earnings Release Presentation - Second Quarter 2008 (2Q08)

BrazilianBrazilian SocialSocial PyramidPyramid

A / B

C

D / E

2005 2006 2007

15%

34%

51%

18%

15% of the population28 million of people

36%46% of the population86,2 million of people

46%

39% of the population72,9 million of people

BRAZILIAN POPULATION DISTRIBUTION PER INCOME CLASS (%) 2005‐2006‐2007

SOURCE: PESQUISA CETELEM  – IPSOS 2005/2006/2007

Class C has consistently grown throughout the past years...

Page 6: Earnings Release Presentation - Second Quarter 2008 (2Q08)

RecoveryRecovery ofof the minimum wage purchasing powerthe minimum wage purchasing power

... and the minimum wage has grownin real terms...

SOURCE: DIEESE

Contracted Values SBPE + FGTSR$ billions

Source: ABECIP, CBIC, Banco Central do Brasil,*SBPE 2008 as of Mai/08

R$

45,2%

6

50 

100 

150 

200 

250 

300 

350 

400 

450 

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

3,066 2,697 3,8615,478

6,768 6,919

3,199

9,7341,769 2,218

3,002

4,852

9,340

18,410

6,932

4,981

2002 2003 2004 2005 2006 2007 1S07 1S08

FGTS SBPE

Page 7: Earnings Release Presentation - Second Quarter 2008 (2Q08)

WhatWhat doesdoes ClassClass CC intendintend toto purchase next yearpurchase next year??

“The intention to acquire a house remains in an upward trend...

... and it reaches the 16% record with easier access to credit.”

SOURCE: Research CETELEM – iPSOS 2005/2006/2007

%

7

9

16

10

13

20

25

26

18

21

28

37

41

10

14

11

17

18

23

20

19

20

33

41

40

9

10

11

16

17

18

19

20

20

32

37

37

Sporting Goods

House/Property

Motorcycle

General Working Tools

Decoration

Desktop Computer

Mobile Phone

TV, HI‐FI and Video

Automobile

Leisure

Furniture

Appliances

200520062007

Page 8: Earnings Release Presentation - Second Quarter 2008 (2Q08)

MRV LOG MRV LOG –– WarehousingWarehousing, Industrial, Industrial CondominiumsCondominiums,, HUBsHUBs eeLogistics ParksLogistics Parks

8

Capital Commitment: R$ 45 million.

Success Factors: i) strong demand and market; ii) experience in the distribution center market iii) expertise in land acquisition; and iv) low costs

Projects:

MRV LOG I – Construction already started. Gross Leasable Area - 54.500 m².

MRV LOG II – Construction begins in the 4Q08. Gross Leasable Area- 11.500 m².

MRV LOG I

MRV LOG II

Page 9: Earnings Release Presentation - Second Quarter 2008 (2Q08)

RealReal Estate CorrespondentEstate Correspondent -- CEFCEF

9

1st homebuilder in the country to be certified1st homebuilder in the country to be certifiedas a CEF Real Estate Correspondent as a CEF Real Estate Correspondent

Long experience in the “Associativo” model

Uninterrupted relationship with CEF for over 25 years

Increased efficiency to approve contracts andgrowth in operation volume

Page 10: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Debenture issueDebenture issue ++ Housebuilding FinancingHousebuilding Financing

10

R$300 million Debenture issue in July 2008.

Contracting of construction financing for several ongoing projects, with a total value of R$164 million (outstanding).

Total Volume R$ 300 million, in two series

Issue Date June 15th, 2008

Term 5 years

Amortization 3rd, 4th and 5th year, in 3 equal parcels

1st series amount R$ 271,4 million

1st series interest CDI + 1,5% p.y.

Payable semiannually

2nd series amount R$ 28,6 million

2nd series interest IPCA + 10,8% p.y.

Payable annually

Page 11: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Operating andOperating and FinancialFinancial HighlightsHighlights

11

Page 12: Earnings Release Presentation - Second Quarter 2008 (2Q08)

LaunchesLaunches (%MRV, R$(%MRV, R$ millionsmillions))

12

Launches in 1H08 have already reached 56.2% of the guidance…

218.5

691.5

797.7

432.5

1.489.3

2Q07 1Q08 2Q08 1H07 1H08

265.1%

15.4%

244.3%

Page 13: Earnings Release Presentation - Second Quarter 2008 (2Q08)

LaunchesLaunches

13

Price Range Distribution - 1Q08 Price Range Distribution- 2Q08

The R$80 thousand to R$130 thousand price range represents the largest share of our launched mix.

Under R$ 80,000

9%

From R$ 80,001 to R$

130,00062%

From R$ 130,001 to R$

180,00027%

Over R$ 180,000

2%

Under R$ 80,00011%

From R$ 80,001 to R$

130,00071%

From R$ 130,001 to R$

180,00015%

Over R$ 180,000

3%

Page 14: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Contracted Sales Contracted Sales (MRV%, R$ millions(MRV%, R$ millions) )

14

Contracted Sales in 1H08 reached 43.2% of the medium range of guidance ...

8,0% 8,9%

12,5% 11,9% 10,9%

2005 2006 2007 1Q08 2Q08

Sales Average Speed (month)145.8

340.1

480.7

276.1

820.9

2Q07 1Q08 2Q08 1H07 1H08

229.7%

41.3%

197.3%

Page 15: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Contracted SalesContracted Sales

15

Price Range Distribution- 1Q08 Price Range Distribution - 2Q08

The price range from R$80 thousand to R$130 thousand represents the largest share of our sales mix.

Under R$ 80,00016%

From R$ 80,001 to R$

130,00048%

From R$ 130,001 to R$

180,00023%

Over R$ 180,000

13%Under R$

80,00020%

From R$ 80,001 to R$

130,00046%

From R$ 130,001 to R$

180,00022%

Over R$ 180,000

12%

Page 16: Earnings Release Presentation - Second Quarter 2008 (2Q08)

ContractedContracted Sales Sales –– SalesSales ChannelsChannels

16

Our geographic diversification has strong impact in the distribution of contracted sales across sales channels...

... we optimize our sales channels according to our geographic presence.

REAL ESTATE BROKER

70%

OWN STORE

16%

VIRTUAL STORE

14%

Page 17: Earnings Release Presentation - Second Quarter 2008 (2Q08)

163 177

1.433

10.009 10.122 10.384 10.087 10.252 9.618 9.935

2004 2005 2006 2007 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08

Land Bank Land Bank (%MRV)(%MRV)

17

R$ Millions... and an exceptional quality: located in urban areas.

Our land bank has an unique diversification...

Distribution

Capital Cities 30 47.6%Countryside Cities 33 52.4%

Total 63 100.0%

%MRV R$'000 % # of Projects Units (thousands)

Average Price R$'000

São Paulo 5,778.7 58.2% 124 57.1 101.1 Minas Gerais 1,767.0 17.8% 56 21.2 83.4 Espírito Santo 469.9 4.7% 7 5.3 88.0 Goiás 457.1 4.6% 11 5.2 88.1 Rio de Janeiro 309.4 3.1% 15 3.7 84.2 Rio Grande do Norte 243.8 2.5% 1 2.6 92.9 Rio Grande do Sul 190.1 1.9% 6 1.8 104.6 Paraná 176.3 1.8% 8 1.6 108.1 Ceará 166.4 1.7% 5 1.7 98.8 Santa Catarina 157.8 1.6% 7 1.5 108.8 Mato Grosso 115.3 1.2% 2 1.1 108.4 Mato Grosso do Sul 42.4 0.4% 1 0.4 107.2 Bahia 31.9 0.3% 3 0.3 94.3 Distrito Federal 28.6 0.3% 3 0.3 100.7

Total 9,934.7 100.0% 249 103.8 95.7

As of June 30, 2008

Page 18: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Net Operating Revenue Net Operating Revenue (R$(R$ millionsmillions ))

18

Consistent Net Operating Revenue growth reflects the strength of our homebuilding structure.

80.3

184.0

277.1

141.9

461.1

-

50,0

100,0

150,0

200,0

250,0

300,0

350,0

400,0

450,0

500,0

2Q07 1Q08 2Q08 1H07 1H08

Net Operating Revenue (R$'MM)

244.9%

50.6%

225.0%

Page 19: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Gross Profit Gross Profit (R$(R$ millionsmillions ) ) and Gross Margin and Gross Margin (%)(%)

19

Healthy margin due to the Company’s efficiency and strong market conditions.

30.4

75.7

112.7

53.2

188.4

37.9% 41.1% 40.7% 37.5%40.9%

-

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

180,0

200,0

2Q07 1Q08 2Q08 1H07 1H08

Gross Revenue R$'MM and Gross Margin %

Page 20: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Selling Expenses (R$‘MM) and Selling Expenses / Net Operating Revenue (%)

Productivity Indicators Productivity Indicators –– Selling ExpensesSelling Expenses

20

Increase in selling expenses reflects the growth of contracted sales...

Selling Expenses / Contracted Sales (%)

6.4

17.7

26.6

8.0%

9.6% 9.6%

2Q07 1Q08 2Q08

4.4%

5.2%5.5%

2Q07 1Q08 2Q08

Page 21: Earnings Release Presentation - Second Quarter 2008 (2Q08)

G&A (R$’MM) and G&A / Net Operating Revenue (%)

Productivity Indicators Productivity Indicators –– G&A ExpensesG&A Expenses

21

... and management has gained efficiency with the increase of the operational scale.

G&A / Contracted Sales (%)

10.5

15.2

21.0 13.1%

8.2%

7.6%

2Q07 1Q08 2Q08

7.2%

4.5% 4.4%

2Q07 1Q08 2Q08

Page 22: Earnings Release Presentation - Second Quarter 2008 (2Q08)

EBITDAEBITDA (R$(R$ millionsmillions ) ) and EBITDA Margin and EBITDA Margin (%)(%)

22Note: EBITDA in 2Q07 and in 1H07 excludes non-recurring IPO expenses and expenses related to the Private Equity transaction.

Growing EBITDA margin is a reflection of scale gains...

17.5

44.4

68.8

29.9

113.3

21.8% 24.2% 24.8% 21.1% 24.6%

-

20,0

40,0

60,0

80,0

100,0

120,0

2Q07 1Q08 2Q08 1H07 1H08

Adj. EBITDA R$'MM and Adj.EBITDA %

Page 23: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Net Income Net Income (R$(R$ millionsmillions )) and Net Margin and Net Margin (%)(%)

23

... and also results in an extremely healthy net margin.

16.1

50.8

66.7

24.4

117.5

20.1%27.6% 24.1% 17.2%

25.5%

-

20,0

40,0

60,0

80,0

100,0

120,0

140,0

2Q07 1Q08 2Q08 1H07 1H08

Adj. Net Income R$'MM and Adj. Net Margin %

Note: Net Income in 2Q07 and in 1H07 excludes non-recurring IPO expenses and expenses related to the Private Equity transaction.

Page 24: Earnings Release Presentation - Second Quarter 2008 (2Q08)

Unearned Results Unearned Results (R$(R$’’000)000)

24

R$'000 2Q08 1Q08 2Q07 Chg% 2Q08 x 1Q08

Chg% 2Q08 x 2Q07

Unearned Sales Revenue 811,745 606,988 242,048 33.7% 235.4%Unearned Cost of Units Sold (406,071) (298,010) (115,579) 36.3% 251.3%Unearned Results 405,674 308,978 126,469 31.3% 220.8%% Unearned Margin 50.0% 50.9% 52.2% -0.9 p.p. -2.3 p.p.

Page 25: Earnings Release Presentation - Second Quarter 2008 (2Q08)

MRV firmly believes in the growth of the construction market.

OutlookOutlook

25

2008

PSV (%MRV - R$'MM) 2,500 ~ 2,800

Contracted Sales - R$'MM 1,800 ~ 2,000

Gross Margin 40% ~ 44%

EBITDA Margin 24% ~ 28%

Net Margin 21% ~ 25%

Page 26: Earnings Release Presentation - Second Quarter 2008 (2Q08)

This release contains forward-looking statements that are not merely historical facts but reflect the goals and expectations of MRV Engenharia’s management. Words such as “anticipates”, “believes”, “may”, “will”, “expects”, “intends”, “plans”, “estimates” or similar expressions are forward-looking statements. Though we believe that these forward-looking statements are based on reasonable assumptions, they are subject to risks and uncertainties, and are based on information currently available with MRV Engenharia. This presentation is current as of end 1Q08 and MRV Engenharia takes no responsibility to update it with new information and/or forward-looking statements. MRV Engenharia is not responsible for investments or investment decisions based on information contained in this presentation.

DisclaimerDisclaimer

26

Page 27: Earnings Release Presentation - Second Quarter 2008 (2Q08)

ContactsContacts

27

Leonardo Corrêa

Executive VP and Investor Relations Officer

Mônica SimãoFinancial Director

Telephone: (31) 3348-7171

E-mail: [email protected]

www.mrv.com.br/ri