earnings release presentation - third quarter 2007 (3q07)
TRANSCRIPT
Presentation of 3Q07 Results
Rubens Menin Teixeira de Souza - CEO
Comments on the 3Q07 Comments on the 3Q07
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Name of the game: TEAM!Name of the game: TEAM!
Integrated business model
Huge capacity for land
prospecting and acquisitionHighly qualified
team and culture of ‘partnership’
FINANCIAL MANAGEMENT
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Competitive Competitive advantagesadvantages Experience and
focus on housing for the lower income
segment
Industrial production with standardization,
scale, and flexible modulation
Shorter operational
cycle than the standard for residential
construction
Geographic diversification
COMMERCIALREAL ESTATE DEVELOPMENT PRODUCTION
AREA # Employees % Stocks % OptionsAverage time in
company (years)
Real state development 7 8.12% 0.18% 14.3
Production 7 1.32% 0.48% 12.8
Commercial 3 0.15% 0.17% 4.1
Finance management 10 0.36% 1.34% 5.5
TOTAL 27 9.95% 2.17% 9.5
IntegratedIntegrated ModelModel
Integrated business
model
Huge capacity for land
prospecting and acquisition
Highly qualified team and culture of
‘partnership’
4ProfitabilityProfitability
CompetitiveCompetitiveAdvantagesAdvantages Experience and
focus on housing for the lower income
segment
Industrial production with standardization,
scale, and flexible modulation
Shorter operational cycle than the standard
for residential construction
Geographic diversification
‘partnership’
On course to MRV 40,000On course to MRV 40,000
High capacity of land bank acquisition and project development;
Constant geographic expansion and diversification;
Real increase in production capacity as a result of organic growth and higher number of partners;
Long-term partnerships with suppliers of raw material and equipment, allied to production planning toensure that demand is met;
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ensure that demand is met;
Expansion of own and outsourced sales force;
Investments in technology and information;
Processes optimization;
Investment in employee loyalty.
Leonardo Corrêa – Deputy CEO and Investor Relations O fficer
Financial and Operating PerformanceFinancial and Operating Performance
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Launches grew 473% in the 3Q07 and 225% in the 9M07 compared to the 3Q06 and the 9M06,respectively:
– PSV of R$ 290 million in the 3Q07 and R$ 784 million in the 9M07
Increase of 261% in contracted sales in the 3Q07 and 235 % in the 9M07, compared to the 3Q06and the 9M06, respectively:
HighlightsHighlights
and the 9M06, respectively:
– R$ 218 million in the 3Q07and R$ 513 million in the 9M07
Land Bank worth R$ 6.9 billion, covering 51 cities
Increase of 203% in the Net Operating Revenue in the 3T07 and 167% in the 9M07, year-on-year:
– R$ 113 million in the 3Q07 and R$ 255 million in the 9M07
Gross Margin of 43% in the 3Q07, considering financial revenue from clients
Adjusted EBITDA grew by 308% compared to the 3Q06, totaling R$ 31 million, with a margin of 27.4%
Adjusted Net Income in the 3Q07 was R$ 38 million, with a net margin of 33.4%
MRV’s unearned results grew 43% in relation to the 2Q07, reaching R$181 million
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Real Estate Market for the Lower Income SegmentReal Estate Market for the Lower Income Segment
Increase in the amount that each unit may get as loan from severance indemnity (FGTS) funds;
Entry of commercial banks in real estate loans based on FGTS funds; and
Huge availability of real estate finance:
• net funds from savings accounts totaled R$ 3.4 billion in September and R$ 14.8 billion in the year;
• increase in the employed population and the volume of salaried hours, directly impacting funds
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• increase in the employed population and the volume of salaried hours, directly impacting fundsavailable in FGTS.
AdjustedAdjusted G&AG&A (R$’000) (R$’000) andand AdjustedAdjusted G&AG&A / / ContractedContracted Sales (%)Sales (%)
Productivity Indicators Productivity Indicators –– General and Administrativ e General and Administrative (G&A) Expenses(G&A) Expenses
12.8%
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7,722
14,102 15,707
35,129
10,533
14,102
6.5%
10.3%
6.8% 6.7% 6.5%
3Q06 3Q07 9M06 9M07 2Q07 3Q07
Adjusted G&A Adjusted G&A / sales
6.0%
Productivity Indicators Productivity Indicators –– Selling ExpensesSelling Expenses
Selling Expenses (R$ ‘000) and Selling Expenses / C ontracted Sales (%)
3,632
8,447 7,910
20,083
6,449
8,447
3.9%
5.2%
3.9%4.1%
3.9%
3Q06 3Q07 9M06 9M07 2Q07 3Q07
Selling Expenses Selling Expenses / sales
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PSV PSV (100% (100% in R$‘000)in R$‘000)
783,457
15%
51%
27%
7%
Launch Mix - 9M07
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50,541
289,723 241,372 254,474
289,723
3T06 3T07 9M06 9M07 2T07 3T07
Up to 80,000 From 80,001 to 130,000
From 130,001 to 180,000 Over 180,000
20%
63%
11%
6%
Launch Mix - 3Q07
Up to 80,000 From 80,001 to 130,000
From 130,001 to 180,000 Over 180,000
513,298
Contracted SalesContracted Sales (100% in R$’000(100% in R$’000))21%
32%23%
24%
Contracted Sales Mix - 9M07
60,304
217,530
153,141 157,677
217,530
3Q06 3Q07 9M06 9M07 2Q07 3Q07
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Up to 80,000 From 80,001 to 130,000
From 130,001 to 180,000 Over 180,000
18%
25%
20%
37%
Contracted Sales Mix - 3Q07
Up to 80,000 From 80,001 to 130,000
From 130,001 to 180,000 Over 180,000
LandLand BankBankOctober 31st, 2007 (100%)
LAND BANK PER STATEPSV
(R$ Million)% per State
#
Projects
# Units
(Thousand)
Average Price
(R$'000)
Area
(m2 thousand)% Swap
São Paulo SP 4,042.3 58.3% 121 38.3 105.4 2,214.0 28.5%
Minas Gerais MG 1,369.3 19.7% 56 16.5 83.0 900.3 17.0%
Rio de Janeiro RJ 368.0 5.3% 12 3.8 96.4 202.6 22.7%
Goiás / Distrito Federal GO/DF 329.5 4.8% 10 3.4 98.2 227.6 60.1%
Paraná PR 252.1 3.6% 15 2.4 105.6 127.9 29.7%
Rio Grande do Sul RS 239.1 3.4% 7 2.3 105.7 121.6 13.6%
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Rio Grande do Sul RS 239.1 3.4% 7 2.3 105.7 121.6 13.6%
Espírito Santo ES 237.2 3.4% 6 2.6 92.3 163.3 0.7%
Santa Catarina SC 76.2 1.1% 5 0.8 94.1 49.5 16.6%
Bahia BA 20.0 0.3% 1 0.2 100.0 10.6 0.0%
TOTAL 6,933.8 100% 233 70.2 98.7 4,017.4 24.5%
LAND BANK PER TOWN - EVOLUTION R$'Million
REGION Dec31, 06 Mar31, 07 Jul31, 07 Oct 31, 07
State Capitals and greater areas 587.4 611.5 1,904.0 2,768.0
Smaller cities 845.3 916.4 2,430.9 4,165.8
TOTAL 1,432.7 1,527.8 4,334.9 6,933.8
Dec 31, 2006
1,432.7
Mar 31, 2007
1,527.8
Jul 31, 2007
4,334.9
Oct 31, 2007
6,933.8
Dec 31, 2006 Mar 31, 2007 Jul 31, 2007 Oct 31, 2007
Net Operating RevenueNet Operating Revenue
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37,451
113,328
95,631
255,179
80,326
113,328
3Q06 3Q07 9M06 9M07 2Q07 3Q07
Gross Income andGross Income and Gross Margin Gross Margin
38%41% 32%
39% 38%41%
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14,180
45,902 30,950
99,129
30,443 45,902
38%
3Q06 3Q07 9M06 9M07 2Q07 3Q07
Gross Income Gross Margin
Adjusted EBITDA and Adjusted EBITDA MarginAdjusted EBITDA and Adjusted EBITDA Margin
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7,607
31,067
13,392
60,972
17,498
31,067
20%
27%
14%
24%22%
27%
3Q06 3Q07 9M06 9M07 2Q07 3Q07
Adjusted Ebitda EBTIDA Margin
62,268 33%
24%
33%
Adjusted Net Income and Adjusted Net MarginAdjusted Net Income and Adjusted Net Margin
6,029
37,880
10,301
16,139
37,880 16%
11%
24%
20%
3Q06 3Q07 9M06 9M07 2Q07 3Q07
Adjusted net Income Net Margin
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Unearned Results (R$’000)Unearned Results (R$’000)
R$ thousand
UNEARNED RESULTS 3Q07 3Q06 2Q07Chg. %
3Q07 x 3Q06Chg. %
3Q07 x 2Q07
Unearned Sales Revenues 326,881 106,637 242,048 206.5% 35.0%
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Unearned Sales Revenues 326,881 106,637 242,048 206.5% 35.0%
Unincurred Cost of Units Sold (145,482) (56,889) (115,579) 155.7% 25.9%
Unearned results 181,399 49,748 126,469 264.6% 43.4%
Unearned margin (%) 55.5% 46.7% 52.2% 8.8 p.p. 3.3 p.p.
MRV continues to believe firmly in the growth of the construction market and this belief has been guiding
our operational plans. Below is our outlook for 2007 and 2008:
OutlookOutlook
GUIDANCE 2007 original 2007 revised 2008
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PSV (100% MRV - R$ million) 920 ~ 980 1,030 ~ 1,100 2,000 ~ 2,200Contracted sales (R$ million) 610 ~ 660 640 ~ 690 1,500 ~ 1,700
Gross margin 38% ~ 41% 39% ~ 41% 40% ~ 44%EBITDA margin* 21% ~ 24% 24% ~ 26% 24% ~ 28%Net margin* 19% ~ 22% 24% ~ 26% 21% ~ 25%
* For 2007, read Adjusted EBTIDA margin and Adjusted Net margin.
This release contains forward-looking statements that are not merely historical facts
but reflect the goals and expectations of MRV Engenharia’s management. Wordssuch as “anticipates”, “believes”, “may”, “will”, “expects”, “intends”, “plans”,“estimates” or similar expressions are forward-looking statements. Though we believethat these forward-looking statements are based on reasonable assumptions, they
DisclaimerDisclaimer
that these forward-looking statements are based on reasonable assumptions, theyare subject to risks and uncertainties, and are based on information currentlyavailable with MRV Engenharia. This presentation is current as of end 2Q07 andMRV Engenharia takes no responsibility to update it with new information and/orforward-looking statements. MRV Engenharia is not responsible for investments orinvestment decisions based on information contained in this presentation.
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ContactsContacts
Leonardo Corrêa
Deputy CEO and Investor Relations Officer
Mônica Simão
CFOCFO
Juliana Bastos
Manager - Investor Relations and Planning
Telephone: (31) 3348-7106
E-mail: [email protected]
www.mrv.com.br/ri
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