Gafisa SA (GFA)

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Gafisa SA (GFA)

Q4 2009 Earnings Call Transcript

February 9, 2009 9:00 am ET


Wilson Amaral – CEO

Duilio Calciolari – CFO and IR Officer

Luiz Mauricio Garcia – IR Manager


Gordon Lee – UBS

Marcelo Telles – Credit Suisse



Good morning. Welcome to Gafisa’s conference call for the results of the fourth quarter and full year of 2009. With us, we have Mr. Wilson Amaral, Gafisa’s CEO, Mr. Duilio Calciolari, Gafisa’s CFO and IR Officer and Luiz Mauricio Garcia, IR Manager.

We’d like to inform you that the presentation is being recorded and all participants will be just listening to the webcall during the company’s presentation. Then, we shall start the Q&A session when further information will be provided. Should you need any assistance, please dial star zero.

Before we begin, I would like to let you know that the teleconference will be related to the operational and financial result of Gafisa and may include statements that are not historical facts and are considered forward-looking.

These forward-looking statements reflect Gafisa’s current views about future events and financial performance. The forward-looking statements are subject to a variety of risks, uncertainties and other factors that could cause our actual results to differ materially from Gafisa’s expectations. And, Gafisa expressly does not undertake any duty to update forward-looking statements whether as a result of new information, future events or otherwise. Among other things, any changes in macroeconomic policies or legislation and other operational results can affect Gafisa’s performance.

So, now I would like to pass the floor over to Wilson Amaral. Mr. Wilson, you have the floor.

Wilson Amaral

Good morning and thank you for joining us on our full year and fourth quarter 2009 conference call. I am joined here today by our CFO, Duilio Calciolari and our Investor Relations Manager, Luiz Mauricio Garcia.

Gafisa successfully navigated 2009 and this year has emerged as one of the strongest global economies in terms of growth potential. With a strengthened business structure, including three respected brands with a presence in all income segments, expanded geographic reach and a large land bank of 15.8 billion reais, we are poised to accelerate our launches over the coming years.

Unemployment rates as low as 7% continued real wage expansion and a renewal in consumer confidence during the fourth quarter underpinned strong demand for housing in all segments that approached pre-crisis levels. As a result in the fourth quarter alone, we launched and sold over 1 billion reais, a record quarterly high and almost double the year-ago period.

We also exceeded our expectations for sales for the year and delivered solid operating margin expansion up from 14.9% in 2008 to 17.5% for 2009 without considering Tenda’s goodwill and net of provisions, 50 basis points over 2009 guidance.

Looking forward, we expect the favorable operating environment enjoyed by homebuilders during the latter part of 2009 to continue to prevail in 2010 on the basis of strong fundamentals.

Gafisa will benefit from what is expected to be sustainable GDP growth at a rate of over 5% per year as well as robust public and private financial structures supporting mortgage growth and the building sector. In the next year, we expect to continue to drive leadership in our sector while transforming this company into a national powerhouse by launching developments totaling between 4 to 5 billion reais.

Mortgage lending capacity from both private and public sources is ample, highlighted by Caixa Econômica Federal’s current 2010 FGTS budget of 24 billion reais, some 25% higher than granted in 2009, as well as an additional 6 billion reais for corporate debentures. While there is not yet a commitment to expand Minha Casa Minha Vida program, we are all working to extend the Government’s support to this program beyond 2010.

With the full integration of Tenda, we now have a streamlined corporate structure and while we did not anticipate some of the hurdles encountered in this segment during 2009, which were exacerbated by a global economic downturn, we are confident that we will see substantial improvement in both top line and operating performance within that business in 2010. And it will become an important engine of growth moving forward.

Now, let's turn to slide four, so I can give you a snapshot of some of the key financial achievements of the year and fourth quarter.

I am pleased to say that we not only achieved, but exceeded our objectives for the fourth quarter. In the final quarter, sales grew by almost 80% as compared to the fourth quarter of 2008, reaching a record quarterly high of just over 1 billion reais.

For the full year, we achieved 3.24 billion reais, just exceeding the top end of our guidance range. Launches also rated 1 billion reais for the quarter, bringing the total for the year to 2.3 billion reais, which is in line with our strategy to reduce inventories in 2009.

It's also important to highlight that our adjusted gross margin continued to show improvement and reached almost 35% in the fourth quarter '09. EBITDA adjusted for non-cash stock option expenses was 174.3 million reais, 112% higher than the fourth quarter of 2008. Thanks both to the strong revenue growth and improved operating profitability.

Our EBITDA margin for the year expanded to 20%, some 274 basis points higher than in 2008. In fourth year of 2009, EBITDA for Tenda's goodwill and net of provisions reached 529.9 million reais, with 17.5% margin or 50 basis points higher than the guidance for 2009.

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