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TRANSCRIPT
Company Presentation
J 2011June, 2011
Company Overview
Integrated business model: development, construction and sales
Focused on residential market, primarily the low and the middle income segments
Experience with large-scale operation: more than R$ 8 billion launched which represent ISA8%
Ownership Structure
p g p pover 32,000 units
Significant Land Bank with VGV of R$10.9 billion in areas with high potential growth
Experienced and professional management with financial and operational background
Paladin40%
8%
World-class controlling shareholder: Paladin Realty Partners
Strong expertise in the real estate industry
More than US$ 5 billion invested in projects
Free Float52%
Focused on financial discipline Corporate Governance
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Company with proven execution capacity and positioned to benefit of the positive environment
Sustainable growth after change of control
2008 2009 2010 2011
F h
Cash Flow Turnaround Financial Turnaround Operational Turnaround
C it l i j ti b C it li ti th h
Continous Growth…
S t i bl thFocus on cash management
Sale of non-core assets (R$200 million)
Identification of strategic
Capital injection by Paladin
Full profissionalization
Focus on costs control and operatins results
Capitalization through new lines of credit and follow-on
New project launched highly sucessful
Credit lines exceed the needs
Sustainable growth supported in almost its entirety by existing land bank
Continuous improvement gpartner
EBITDA
Consolidation and growth of results
of ROE
EBITDA(R$ millions) (14) 45 140
Real Estate Credit Line(R$ millions)(R$ millions)
500 700 1,300 1,300 + 300Debentures
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Management and Board of Directors E ti Offi Board of DirectorsExecutive Officers
Alvaro SimõesCEO
Graduated in mechanical engineering from EscolaPolitecnica de São Paulo and continued his graduate studies in business at FGV.More than 20 years of experience in the financial sector (Santander, Indosuez, Unibanco and Santander)
Board of Directors
Michael LenardPresident of the Board
Senior Managing Director of Paladin Realty Partners.Was a partner in the international law firm of Latham & Watkins and member of de various industry organizations including the Urban Land Institute, where he serves on the Entertainment Development Council.
Otávio AraujoCFO and IRO
Enzo Riccetti
Graduated in Production Engineering from UFRJHe worked as an investment analyst in the private equity area of Banco Icatu. He is partner at Ascet Investimentos, an investment and consulting firm.
Graduated in Civil Engineering from the Mauá School of Engineering and completed the Specialization Course on
Entertainment Development Council.
Alexandre Vásárhelyi Vice-PresidentIndependent Director
Worked as a business executive for the Indosuez and Credit Suisse First Boston between 1993 and 1998. At Deutsche Asset Management he was responsible for managing three derivative funds and at ING bank he held the position of Desk Head for foreign exchange. Recently he is head of treasury of Pine Bank. Enzo Riccetti
Chief Commercial OfficerEngineering and completed the Specialization Course on Management for graduates from CEAG-FGV.Over 18 years of experience in the real estate sector.
Andrew CumminsMember of the Board
Founder and Managing Partner for Explorador Capital. Is also the Head of Research of Paladin Realty Partners, LLC. He also sits on the board of directors of PazCorp and has experience in corporate and real estate acquisitions and financings.
Davi FratelChief Construction Officer
Graduated in Civil Engineering from the Federal Univ. of Bahia, completed the Specialization at Escola Politécnica de São Paulo and a Master’s degree in Housing Technology at the IPT. Over 25 years of experience in management and execution of residential commercial and industrial projects
Jonh GersonMember of the Board
Senior Managing Director and the Chief Financial Officer of Paladin Realty Partners, LLC and its affiliate PaladorRealty, LLC. Was Chief Financial Officer of Kohlberg Kravis Roberts & Co. (KKR) and Vice President and Deputy Controller of Societe Generale’s U.S. operations.
Officer
execution of residential, commercial and industrial projects.
Marco ParizottoMember of the Board
He was the Vice-Chief Commercial Officer until June 2009 and Commercial Officer of Inpar S.A. until July 2010. He has 20 years of experience in the real estate field. He is also an Executive Officer of Isa Incorporação e Construção S.A.
He was Chief Economist and Statutory Officer at BancoABN AMRO R l b t 2006 d 2008 Chi f
6 Officers focused on the areas of Construction,
Commercial and Development
6 Officers focused on the areas of Construction,
Commercial and Development
4 i d d t4 i d d t
Permanent Fiscal Council
Alexandre SchwartsmanIndependent Director
ABN AMRO Real between 2006 and 2008; was Chief Economist and Statutory Officer at Banco Unibanco in 2009; and served as Chief Economist and Statutory Officer in Banco Santander Brasil from 2008 to March of 2011.
Eduardo Wurzmann He was CEO, founder and shareholder of the IbmecGroup, was the Co-CEO of Unext do Brasil. He was the M i Di t f C édit A i l I d S iti
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4 independentmembers
4 independentmembers Independent Director
Managing Director of Crédit Agricole Indosuez Securities,responsible for the equity research and trading practices in Brazil.
Strategy
Focus on first-time home buyers in middle and low income segments
Sustainable growth supported in almost its entirety by existing land bank
Financial discipline
Continuous improvement of ROE
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Foco no comprador da primeira moradia
Migration of households in the "D" and "E" i l t th "C" i l
Favorable environment
Super Low Income 92% i 2010First time home buyer
income classes to the "C" income class captured previously pent-up demand
Growing credit availability and high growth potential for home financing
Super Low Income
R$ 85,000 – R$ 130,000
Low Income
R$ 130,000 – R$ 250,000
92% in 2010
Demand driven by the strong labor market and increased purchasing power
Middle
R$ 250,000 – R$ 420,000
60%Share of people in income
classes in Brazil
30%
40%
50% 49.2%classes in Brazil
24.4%
0%
10%
20%
996
997
998
999
2000
2001
2002
2003
2004
2005
2006
2007
2008
16.0%
Strong presence in the low and middle income segments since 1999
Over R$1.5 billion in VGV delivered (corresponding to 70 buildings and 5 000 units)
1 1 1 1 2 2 2 2 2 2 2 2 2
AB C D E
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and 5,000 units)
Standardized and replicable products
Strong control of production processFonte: FGV
Review of the target market and the new commercial area
New Development Officer Development Officer Commercial Officer
Diretor de Negócios - Sul
Land Bank control and acquisition
Product development
Project approvals
Marketing
Coordination of inventory and launches sales
Management of relationships with brokers
Business Development Officer
Diretor de Negócios Sul
Diretor de Negócios - Norte
CERN
AM
RR
PA
AP
MA
Business Development Officer -NorthNorth, Northeast, Middle West and Minas Gerais
CERN
AM
RR
PA
AP
MA
Before: After:
MG
BA
PI PEAL
RN
GO
MTRO
TO
DF
PB
SEAC
BA
PIPE
AL
RN
GO
MT
ACRO
TO
DF
PB
SE
MG
RJ
ES
PR
SC
MS
SP
Business Development Officer - SouthSoutheast (ex-MG) and South
MG
RJ
ES
PR
RS
SC
MSSP
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Southeast (ex MG) and SouthRSRS
Land bank focused on the first-time home buyer segment and bought inexpensive…
VGV of total land bank:R$10.9 billion First-time Home Buyer Segment
84% of short-term land bank
Low-Income
21%
Mid-Income
41%Super Low-Income
23%
R$3.5bn (VGV)R$6.6bn R$4.3bn Short-term landbank¹
Mid-high Income and Commercial
16%
Mid-to-long term land bank
Acquisition Cost
Total Land bank (VGV): 10.9 bn
Book Value (land): 814 mn
Cost of Land (% VGV): 7.5%
Land Bank (without Lagoa): 5.1 bn
Book Value (without Lagoa): 523mn
Cost of Land (% VGV): 10.3%
8¹ Projects the Company has the operating capacity to launch in the next three years
… added to Lagoa dos Ingleses hidden value
Based on the growth vector of the BeloHorizonte city, the Lagoa dos Ingleses zone isexpected to be next expansion region
Lagoa Land Bank: R$5.8 billion
Lagoa Book Value: R$291 million
Low Land Acquisition CostGrowth Vector of the Belo Horizonte city
Lagoa Book Value: R$291 million
Cost of Land (% VGV): 5.0%Belvedere BH 1998
Belvedere BH 2005
Lagoa dos Ingleses
Sep 2007 Nov 2008 Sep 2010
88% sold in 3 weeks
Average unit sale price:
Average unit sale price: R$3,700 – R$4,000 per m²Mid Income project
More than 40%
70% sold 100% sold in 3 months
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Average unit sale price: R$2,800 per m²Mid-High Income project
g pR$2,600 per m²Mid Income project
Operating and Financial PerformanceOperating and Financial Performance
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Significant improvement of the operational and financial indicators
Launches (R$ millions)
821.9 802.1 464%
142.1
2008 2009 2010
Pre sales (R$ millions) and Sales Speed
109%
1,035.1 378.3
789.0
2008 2009 2010
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Significant improvement of the operational and financial indicators (accountant)
Launches 1Q11 vs. 1Q10 (R$ millions) Details of the 1Q11 Launches
+110%
41%sold in the
quarter 58%sold in the
quarter
VGV Total: R$ 34.5 mn
VGV Viver: R$17.3 mn
High Income
Goiania GOVGV Total: R$ 64.3 mn
Pre sales (R$ millions) and Sales Speed (%)
Goiania-GO VGV Viver: R$45.0 mn
Middle Income
Sao Paulo-SP
Pre sales (R$ millions) and Sales Speed (%)
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Significant improvement of the operational and financial indicators (accountant)
Net Revenue(R$ millions)
59%
Gross Profit (R$ millions)
24 1% 28.5%
566.8 488.2
778.3
129.3 117.5
222.2
59% 24.1%22.8% 89%
2008 2009 2010 2008 2009 2010
Evolution backlog margin X gross margin
36.6%37.1% 36.8%
36.2% 35.8%36.7% 36.5%
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Significant improvement of the operational and financial indicators (accountant)
Net Revenue(R$ million)
+13%
Gross Profit and Gross Margin (R$ million)
24,9%26,5%
,
+21%
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Significant improvement of the operational and financial indicators (accountant)
Ebitda and Ebitda Margin (R$ millions)
17 8%
140 19.3%
18.0%15.0%
17.8%
+35%
(13.6)
45.3
140.1
2008 2009 2010-2.4%
Net Income and Net Margin (R$ millions)
2 8%
4.5%
13.0 67.4 2.7%
8.7%2.8%
+83%
(74.9)
2008 2009 2010
-13.2%
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Capital Structure
Mar 10 Dec 10 Mar 11Short Term 200.2 389.3 511.4 C t d bt 126 8 182 3 188 5Corporate debt 126.8 182.3 188.5 SFH and Project financing debt¹ 73.3 206.9 322.9 Long Term 406.9 544.1 828.4 Corporate debt 269.2 281.8 268.8 SFH and Project financing debt¹ 137.7 262.3 559.6 Total Debt 607.0 933.3 1,340Total Debt 607.0 933.3 1,340 Cash and Cash Equivalents 308.6 215.4 498.3 Net Debt 298.5 717.9 841.4 Net Debt (ex-SFH and Project financing debt and CEF debentures proceedings pledged) 87.4 248.7 259.7 Shareholder's Equity 1,057.9 1,120.8 1,129.1
Net Debt/Equity 28 2% 64 0% 74 5%Net Debt/Equity 28.2% 64.0% 74.5%
Net Debt/Equity (ex-SFH and Project financing debt) 8.3% 22.2% 23.0%
Corporate Debt versus Project
Financing Debt (ex-CEF
debentures) Evolution
(R$ million)
16¹ As detailed in notes 14 and 15 of the Company financial statements.
IR Contacts:IR Contacts:
Phone: 55+ (11) 3046-3139o e 55 ( ) 30 6 3 39
E-mail: [email protected]
Website: www.viver.com.vc/ri/
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Disclaimer
This presentation contains forward-looking statements relating to the prospects of the business, estimates fors p ese tat o co ta s o a d oo g state e ts e at g to t e p ospects o t e bus ess, est ates ooperating and financial results, and those related to growth prospects of Inpar. These are merely projections and, assuch, are based exclusively on the expectations of the Company’s management concerning the future of thebusiness.
Such forward looking statements depend substantially on changes in market conditions project approvals theSuch forward-looking statements depend substantially on changes in market conditions, project approvals, theperformance of the Brazilian economy, the sector and the international markets, and are therefore subject to changewithout prior notice.
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