gfapr1q14_6k.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the month of May, 2014

(Commission File No. 001-33356),

 
Gafisa S.A.
(Translation of Registrant's name into English)
 


 
Av. Nações Unidas No. 8501, 19th floor
São Paulo, SP, 05425-070
Federative Republic of Brazil
(Address of principal executive office)



Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.

Form 20-F ___X___ Form 40-F ______



Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)


Yes ______ No ___X___

Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ______ No ___X___

Indicate by check mark whether by furnishing the information contained in this Form,
the Registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes ______ No ___X___

If “Yes” is marked, indicate below the file number assigned
to the registrant in connection with Rule 12g3-2(b): N/A


 
 

 


 
 

 

GAFISA RELEASES 1Q14 RESULTS

 

FOR IMMEDIATE RELEASE

 

São Paulo, May 09, 2014

Gafisa S.A. (Bovespa: GFSA3; NYSE: GFA), one of the leading Brazilian homebuilder, today reported financial results for the quarter ended March 31, 2014.

 

MANAGEMENT COMMENTS AND HIGHLIGHTS

We started 2014 motivated by the results achieved in the prior year and confident in the goals and guidelines contained in our business plan for the upcoming year.

Traditionally, the first quarter is characterized by seasonally lower activity. In the Gafisa segment, although aware of the changes in the country’s macroeconomic scenario, we are happy with the operational and financial results we achieved in the period. Launch volumes reached R$353.9 million in 1Q14 and included 2 projects in São Paulo and 1 in Rio de Janeiro. Pre-sales reached R$187.6 million in the quarter, with inventories representing 80% of the total, and launches the remaining 20%. It should also be noted that Gafisa segment dissolutions were down 58% y-o-y, despite the high volume of deliveries in recent quarters. This reduction of dissolutions in the Gafisa segment demonstrates the improved credit profile in our customer base.

As for the Tenda segment, the 1Q14 marks another step forward in the application of the new business model initiated in 2013. Given the strong performance of projects launched last year, first quarter launches totaled R$181.4 million and were spread over 4 projects in São Paulo, Rio de Janeiro, Bahia and Pernambuco. Pre-sales reached R$51.8 million and were impacted by a higher volume of dissolutions. This is the result of the delivery of almost 5 thousand units in the last 6 months.

Since late 2013, reduced operational complexity coupled with the narrowing of the Company’s geographic footprint, led to higher profitability. The consolidated gross margin, before interest, increased to 30.5% in 1Q14, as compared to 22.0% in same quarter of last year.

Cash generation was a highlight in the quarter. The Company recorded cash generation of R$107.3 million in 1Q14, reaching free cash flow of R$20.5 million.

Reasserting our commitment to enhancing shareholder value, at the end of April the Company approved the payment of supplementary dividends totaling R$32.9 million, which, when added to interest on own capital paid in February, represents a dividend yield of 11.0%, based on 2013.

We continue to implement our five-year business plan for the 2014 to 2018 period, in which guidelines for the development of our business for the coming years were established. The plan details the expected size of Gafisa and Tenda’s operations, appropriate leverage, profitability guidelines, and importantly, our commitment to capital discipline and shareholder value generation, which are reflected in the guidance released to the market at the end of 2013.

On February 2014, we announced that the Board is studying the potential separation of the Gafisa and Tenda business units into two independent, public companies. We are analyzing possible impacts and scenarios for the proposed separation to identify what are the best ways for its implementation. In these first three months of the year, we have made progress in the administrative separation process of the Gafisa and Tenda business units, already dividing some areas between both companies, and we expect that most of this process to be completed by the end of the year, at which point the two companies will operate independently from an administrative point of view. As part of this process, Duilio Calciolari, after 14 years of meaningful dedication to Gafisa, announced in February the intention to leave his position, and after a transition period, Sandro Gamba was appointed CEO last Monday, and Rodrigo Osmo remains in charge of Tenda business. The Company will keep the market informed as new definitions may occur over the coming months.

­

 

 

  

2


 
 

 

 

Gafisa entered 2014 well positioned to benefit from all the initiatives implemented in the last two years. Reduced operational complexity, a more appropriate cost and expense structure, the new Tenda operating model and Gafisa’s narrowed geographic footprint, coupled with financial flexibility achieved by the sale of a stake in Alphaville, were important steps in preparing the Company to face future challenges. These initiatives should also lead to improved results in 2014.

 

 

 

Sandro Gamba

Rodrigo Osmo

Chief Executive Officer – Gafisa S.A.

Chief Executive Officer - Tenda

 

 

 

 

 

 

 

­

 

 

 

3


 
 

 

 

FINANCIAL RESULTS

 

       Net revenue recognized by the “PoC” method was R$326.7 million in the Gafisa segment and R$105.9 million in the Tenda segment. This resulted in consolidated revenue of R$423.7 million in the first quarter, a reduction of 14.7% compared with the previous year.

 

       Adjusted gross profit for 1Q14 was R$132.1 million, up from R$111.7 million in 1Q13. Adjusted gross margin rose to 30.5% versus 22.0% in the prior-year period. The Gafisa contributed with R$116.5 million, and margin of 35.7%, while the Tenda segment’s adjusted gross profit was R$15.6 million, with a margin of 14.7% in 1Q14.

 

       Adjusted EBITDA was R$26.5 million in the 1Q14. The Gafisa segment reported adjusted EBITDA of R$54.8 million, while the Tenda segment’s adjusted EBITDA was negative at R$24.9 million. Note that the consolidated adjusted EBITDA includes the effect of the AUSA equity, while Gafisa segment adjusted EBITDA is net of this effect.

 

       The Company reported a net loss of R$39.8 million in the first quarter.

 

       Operating cash generation reached R$107.3 million in the 1Q14, resulting in positive free cash flow of R$20.5 million. The Gafisa segment recorded R$99.1 million in operating cash generation, while the Tenda segment reached R$8.2 million.

 

 

OPERATING RESULTS

 

       Launches totaled R$535.4 million in the 1Q14, compared to R$196.7 million in the 1Q13. The Gafisa segment launched R$353.9 million across 3 projects, while the Tenda segment launched 4 projects with a total PSV of R$181.4 million.

 

       Consolidated  pre-sales totaled R$239.3 million in the 1Q14, compared to R$107.9 million in the 1Q13. In the 1Q14, sales reached R$187.5 million in the Gafisa segment and R$51.8 million in the Tenda segment. Consolidated sales from launches represented 24% of the total, while sales from inventory comprised the remaining 76%.

 

       Consolidated sales over supply (SoS) reached 7.5% in the 1Q14 and 3.9% in the 1Q13. In the Gafisa segment, SoS was 7.9%, while in the Tenda segment it was 6.4%.

 

       Consolidated  inventory at market value increased R$233.0 million on a sequential basis, reaching R$2.9 billion. Gafisa’s inventory reached R$2.2 billion and Tenda’s inventory totaled R$752.3 million.

 

       Throughout the 1Q14, the Company delivered 8 projects, totaling 1,796 units. The Gafisa segment delivered 524 units, while the Tenda segment delivered the remaining 1,272 units.

 

 

­

 

 

4


 
 

 

 

ANALYSIS OF RESULTS

 

Gafisa segment

 

Gross Margin Expansion and Reduction in Selling Expenses

During the past year, the Gafisa segment’s margins improved due to the delivery of legacy projects and the narrowing of the brand’s geographic footprint. Accordingly, the segment’s profitability increased. Adjusted gross profit totaled R$132.1 million in 1Q14, with margin of 35.7%, compared to 29.9% in 1Q13.

 

Results were also positively impacted by a 44.8% y-o-y reduction in the level of selling expenses, despite higher launch volumes.

 

Net Income

The first quarter net loss was R$2.3 million, compared to a loss of R$11.6 million in the year-ago period. Excluding the equity from Alphaville, negative at R$3.4 million, Gafisa segment net income in the 1Q14 was positive at R$1.1 million.

Below is a brief description of the main factors impacting results.

 

Gafisa Segment

 

1Q14

 

1Q13

Adjusted Gross Profit

 

116.5

 

109.8

Adjusted Gross Margin

 

35.7%

 

29.9%

Net Profit Ex-AUSA

 

1.1

 

(49.9)

 

Tenda segment 

 

Gross Margin Expansion and Lower Expenses

The reduced contribution and complexity of Tenda legacy projects, coupled with the resumption of launches under a new business model, is resulting in a gradual improvement in the segment’s margins. At the end of 1Q13, adjusted gross profit was at R$1.9 million, while in the 1Q14, it reached R$15.6 million, with adjusted gross margin reaching 14.7%, compared to a margin of 1.3% in the 1Q13.

A streamlined cost structure also contributed to the segment’s first quarter results. Selling, general and administrative expenses decreased from a year earlier to R$12.7 million, with a sharp 43.3% reduction in selling expenses. This was mainly driven by the in-store sale process, which is one of the pillars of the new Tenda business model.

 

Net Income

The first quarter net loss was R$37.5 million, compared to a net loss of R$43.9 million in the 1Q13.

 

 

Tenda Segment

 

1Q14

 

1Q13

Adjusted Gross Profit

 

15.6

 

1.9

Adjusted Gross Margin

 

14.7%

 

1.3%

Net Profit

 

(37.5)

 

(43.9)

 

 

 

 

­

 

 

5


 
 

 

 

RECENT EVENTS

 

Extraordinary Dividends and Share Buyback Program

Following the completion of the sale of the Alphaville stake and the inflow of the transaction proceeds, in a meeting held on December 20, 2013, the Company’s Board of Directors approved the payment of interest on equity to shareholders in the amount of R$130,192,095.57, representing R$0.31112217224 per share. The payment was effective February 12, 2014.

Additionally, on April 25, 2014, at the Annual General Meeting, the payment of R$32,919,915.46 in supplementary dividends to the Company’s shareholders was approved, representing R$0.082486835998 per share, excluding treasury shares. The effective date for payment is still being evaluated by the Company and will be announced to the market as soon as defined.

For fiscal year 2013, the Company approved the payment of dividends totaling R$163,111,939.28 million (gross amount), or approximately R$0.37 per share, representing a dividend yield of 11.0% for the year.

Regarding the share buyback program in place, on April 30, 2014, the company had already acquired 23 million shares, around 71% of the total amount permitted, considering the maximum amount of 32,938,554 shares.

The approved program is conditional on the maintenance of consolidated net debt at a level equal to or less than 60% of net equity and does not obligate the Company to acquire any particular amount of shares in the market. The program may be suspended at any time.

On February 28, 2014, the Company canceled an open share buyback program in place in the Tenda subsidiary and opened a new program in Gafisa, containing the same previously defined conditions, which can repurchase the remaining balance of shares.

 

Annual General Meeting

On April 25, 2014, the Company’s Annual General Meeting was held, and we highlight the following resolutions:

 

i)              Reduction of the Board of Directors from 9 to 7 members, with the election of the following members for a term of 02 years: Odair Garcia Senra, Cláudio José de Carvalho Andrade, Guilherme Affonso Ferreira, José Écio Pereira da Costa Júnior, Maurício Marcellini Pereira, Rodolpho Amboss and Francisco Vidal Luna;

ii)             Approval of the allocation of net income for the fiscal year 2013, and subsequent payment of approximately R$32.9 million as supplementary dividends, as mentioned above;

iii)            Establishment of up to R$13.4 million in total compensation to be paid to the Company’s management for the fiscal year 2014, approximately 19% less than the amount paid in 2013;

 

 

­

 

 

6


 
 

 

 

Key Numbers for the Gafisa Group

Table 1 – Operating and Financial Highlights – (R$000, and % Gafisa, unless otherwise specified)

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Launches

353,934

679,154

-47.9%

83,029

326.3%

Net pre-sales

187,555

454,457

-58.7%

101,116

85.5%

Pre-sales of Launches

37,915

264,049

-85.6%

11,696

224.2%

Sales over Supply (SoS)

7.9%

17.8%

-55.6%

5.0%

58.0%

Delivered projects, units

524

1,249

-58.0%

86

509.3%

Net Revenue

326,750

489,853

-33.3%

367,285

-11.0%

Gross Profit

88,890

174,429

-49.0%

87,768

1.3%

Gross Margin

27.2%

35.6%

-840 bps

23.9

330 bps

Adjusted Gross Margin¹

35.7%

42.0%

-630 bps

29,9%

580 bps

Adjusted EBITDA

54,810

125,177

-56.2%

44,970

21.9%

Adjusted EBITDA Margin

16.8%

25.6%

-880 bps

12.2%

460 bps

Net Income (Loss)

-2,331

908,827

-100.3%

-11,621

-79.9%

Backlog revenues

1,429,230

1,550,618

-7.8%

1,951,419

-26.8%

Backlog results ³

526,273

547,346

-3.9%

677,546

-22.3%

Backlog margin ³

36.8%

35.3%

150 bps

34.7%

210 bps

Note: Financial operational unaudited information

1) Adjusted by capitalized interests

2) Adjusted by expenses with stock option plans (non-cash), minority. Ebitda from Gafisa segment does not consider the equity of AUSA, for all quarters, and does not include AUSA stake sale operation results in 4Q13.

3) Backlog results net of PIS/COFINS taxes – 3.65%; and excluding the impact of PVA (Present Value Adjustment) method according to Law nº 11,638

 

 

Key Numbers for Tenda

 

 

Table 2 - Operating and Financial Highlights – (R$000, and % Gafisa, unless otherwise specified)

 

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Launches

181,445

88,379

105.3%

113,696

59.6%

Net pre-sales

51,767

163,626

-68.4%

6,785

663.0%

Pre-sales of Launches

20,256

74,587

-72.8%

13,656

48.3%

Sales over Supply (SoS)

6.4%

20.9%

-69.4%

0.9%

611.1%

Delivered projects, units

1,272

2,719

-53.2%

795

60.0%

Net Revenue

105,951

214,897

-50.7%

140,265

-24.5%

Gross Profit

8,458

47,570

-82.2%

-9,623

-187.9%

Gross Margin

7.9%

22.1%

-1420 bps

-6.9%

1480 bps

Adjusted Gross Margin¹

14.7%

28.5%

-1380 bps

1.4%

1330 bps

Adjusted EBITDA

(24,913)

13,761

-281.0%

(25,493)

-2.3%

Adjusted EBITDA Margin

-23.5%

6.4%

-2990 bps

-18.2%

-530 bps

Net Income (Loss)

-37,460

12,457

-400.7%

-43,852

-14.6%

Backlog revenues

212,031

244,789

-13.4%

361,914

-4.1%

Backlog results ³

67,482

66,789

-1.0%

86,148

-21.7%

Backlog margin ³

31.8%

27.3%

450 bps

23.8%

800 bps

           

 

 

7


 
 

 

Key Consolidated Numbers

 

Table 3 - Operating and Financial Highlights – (R$000, and % Gafisa, unless otherwise specified)

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Launches

535,379

767,534

-30.2%

196,725

172.1%

Launches, units

1,866

2,020

-7.6%

1,185

57.5%

Pre-sales

239,323

618,083

-61.3%

107,901

121.8%

Pre-sales, units

767

2,280

-66.4%

361

112.5%

Pre-sales of Launches

58,171

338,636

-82.8%

25,352

129.5%

Sales over Supply (SoS)

7.5%

18.5%

-59.5%

3.9%

92.3%

Delivered projects

557,508

973,963

-42.8%

123,386

351.8%

Delivered projects, units

1,796

4,597

-60.9%

881

103.9%

Net Revenue

432,701

704,750

-38.6%

507,550

-14.7%

Gross Profit

97,348

221,999

-56.1%

78,145

24.6%

Gross Margin

22.5%

31.5%

-900 bps

15.4%

710 bps

Adjusted Gross Margin¹

30.5%

37.9%

-740 bps

22.0%

850 bps

Adjusted EBITDA ²

26,470

138,939

-80.9%

57.769

-54.2%

Adjusted EBITDA Margin ²

6.1%

19.7%

-1360 bps

11.4%

-830 bps

Adjusted Net Income (Loss) ²

(36,808)

896,078

-104.1%

(2,543)

1347.4%

Adjusted Net Margin ²

-8.5%

127.1%

-13560 bps

-0.5%

-800 bps

Net Income (Loss)

(39,879)

921,284

-104.3%

(55,473)

-28.3%

Backlog revenues

1,641,262

1,795,408

-8.6%

2,313,333

-29.1%

Backlog results ³

593,755

614,135

-3.3%

763,694

-22.3%

Backlog margin ³

36.2%

34.2%

200 bps

33.0%

320 bps

Net Debt + Investor Obligations

1,403,824

1,159,044

21.1%

2,485,372

-43.5%

Cash and cash equivalents

1,563,226

2,024,163

-22.8%

1,443,644

8.3%

Shareholder’s Equity

3,106,356

3,190,724

-2.6%

2,489,357

24.8%

Shareholder’s Equity + Minority shareholders

3,129,511

3,214,483

-2.6%

2,644,543

18.3%

Total Assets

7,618,063

8,183,030

-6.9%

8,530,374

-10.7%

(Net Debt + Obligations) / (Equity + Minority)

44.9%

36.1%

880 bps

94%

-4910 bps

­

 

Note: Financial operational unaudited information

1) Adjusted by capitalized interests

2) Adjusted by expenses with stock option plans (non-cash), minority. Consolidated Ebitda includes the AUSA equity effect, for all quarters, but does not consider the AUSA stake sale operation results in 4Q13.

3) Backlog results net of PIS/COFINS taxes – 3.65%; and excluding the impact of PVA (Present Value Adjustment) method according to Law nº 11,638

 

 

 

 

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8


 
 

 

 

Updated Status of the Separation Process

 

Initial Studies and First Steps

In early 2014, Gafisa’s management initiated studies to analyze the possible separation of the Gafisa and Tenda business units.

The separation would be the next step in a comprehensive plan initiated by management to enhance value creation for the Company and its shareholders.

During 1Q14, the Company made initial progress in separating some of Gafisa and Tenda’s administrative functions, initiating the corporate areas effective division process. By the end of the year, most of Gafisa and Tenda administrative structures will be segregated, operating independently.

 

At this moment, we highlight the following points:

 

(1) Definition of segregated corporate structures for Gafisa and Tenda;

(2) Assessment, understanding, sizing and necessary adjustments in processes and systems for separation of areas;

(3) Definition of the separation strategy, workforce, separation schedule for different areas, and major milestones on the process.

 

In parallel, the Company continues the studies related to separation alternatives of the two companies, assessing issues relating to capital structure, liquidity, and fiscal, tax, legal, corporate aspects, among others.

 

As previously announced to the market, with the completion of the turnaround process and in line with the intention of separating Gafisa and Tenda business units, Duilio Calciolari announced to leave the company, after 14 years of dedication to Gafisa. Therefore, on May 05, Sandro Gamba was named the new CEO of the Company. Until then, Sandro Gamba, was the CEO of Gafisa business unit, having held a number of leadership positions, in several areas of Gafisa business cycle, for more than 15 years dedicated to the Company.

Andre Bergstein remains as Chief Financial Officer and Rodrigo Osmo as CEO for Tenda.

 

The Company will keep its shareholders and the market informed about the process and any developments pertaining to the potential separation.

 

 

 

 

 

 

9


 
 

 

GAFISA SEGMENT 

Focuses on residential developments within the upper, upper-middle, and middle-income segments, with unit prices exceeding R$500,000.

 

Operating Results

 

Gafisa Segment Launches and Pre-Sales

­

 

First quarter launches totaled R$353.9 million, represented by 3 projects/phases located in the cities of São Paulo and Rio de Janeiro. In the 1Q13, the segment registered R$83 million in launches.

 

 

 

 

 

The Gafisa segment’s 1Q14 gross pre-sales totaled R$267.9 million. Taking into account a 58% y-o-y decline in the volume of dissolutions, 1Q14 net pre-sales increased 85% y-o-y to R$187.5 million. Inventory accounted for 80% of sales, while the sale of units launched during the quarter represented the remaining 20%. The segment accounted for 66% of consolidated launches.

 

 

Table 4. Gafisa – Launches and Pre-sales (R$000)

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Launches

353,934

679,154

-47.9%

83,029

326.3%

Pre-sales

187,555

454,457

-58.7%

101,116

85.5%

 

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10


 
 

 

 

Sales over Supply (SoS)

1Q14 sales velocity increased to 7.9% from 5.0% in 1Q13. Considering the last 12 months, Gafisa’s SoS ended the 1Q14 at 32.3%. SoS of launches reflects a lower conversion rate (visits x sales) in the quarter due to a longer time limit on the buyer's decision making process, associated with a concentration of launches in late March. The sales performance of these launches will be continued throughout 2Q13.

                               

Dissolutions

The Company has shown a consistent reduction in their level of dissolutions. Gafisa segment dissolutions declined 58.1% y-o-y, in keeping with a decline in the level of dissolutions to a more stable level.

 

 

Of the 148 Gafisa segment units cancelled and returned to inventory, 39% were resold in the period.

Inventory

In 1Q14, Gafisa maintained its focus on inventory reduction initiatives. Accordingly, inventory represented 80% of total sales in the first quarter. The market value of Gafisa segment inventory reached R$2.2 billion in the 1Q14, as compared to R$2.1 billion in the previous quarter. Finished units outside of core markets accounted for R$256.9 million, or 12% of total inventory.

Table 6. Gafisa – Inventory at Market Value (R$000)

 

Inventories BoP 4Q13

Launches

Dissolutions

Pre-Sales

Adjusts + Other

Inventories EoP 1Q14

% Q/Q

São Paulo

1, 435,653

164,333

-71,079

205,166

-84,765

1,381,135

-3.8%

Rio de Janeiro

392,141

189,601

-1,454

29,982

8,081

561,294

43.1%

Other Markets

272,416

-

-7,892

32,832

9,391

256,867

-5.7%

Total

2,100,210

353,934

80,424

-267,980

-67,293

2,199,296

4.7%

 

During the same period, finished units comprised R$309.8 million, or 14% of total inventory. Of this amount, inventory from projects launched outside core markets totaled R$196.7 million. We emphasize that the Company has seen evolution in the sales velocity in these markets over the past few quarters, and we believe that by the end of 2015 we should be able to monetize such inventory in the so called non-core markets.

 

 

11

 


 
 

 

 

Table 7. Gafisa Segment – Inventory at Market Value - Construction Status (R$000)

 

Not initiated

Up to 30% built

30% to 70% built

More than 70% built

Finished

units ¹

Total QT14

São Paulo

411,703

170,173

582,996

123,701

92,562

1,381,135

Rio de Janeiro

174,892

95,806

218,128

51,941

20,528

561,294

Other Markets

-

-

-

60,186

196,681

256,867

Total

586,595

265,979

801,124

235,829

309,770

2,199,296

­

 

Landbank

Gafisa segment landbank, with a PSV of approximately R$6.4 billion, is comprised of 34 different projects/phases located exclusively  in core markets. Amounting to nearly 11.4 thousand units, 78% are located in São Paulo and 22% in Rio de Janeiro. The largest portion of swapped land in Rio de Janeiro, ends up impacting the total land acquired through swaps, which now reaches 59.7%.

Table 8. Gafisa - Landbank 1Q14

 

PSV - R$ mm

(% Gafisa)

%Swap
Total

%Swap
Units

%Swap
Financial

Potential units

(% co)

Potential units

(100%)

São Paulo

4,944,213

44.8%

44.0%

0.8%

9,664

10,994

Rio de Janeiro

1,414,269

90.0%

90.0%

0.0%

1,725

1,728

Total

6,358,482

59.7%

59.1%

0.6%

11,388

12,722

Table 9. Gafisa - Changes in the Landbank 1Q14

 

Inicial Landbank

Land Aquisition

Lunches

Adjusts

Final Landbank

São Paulo

4,867,242

231,234

164,333

10,071

4,944,213

Rio de Janeiro

1,610,940

-

189,601

-7,070

1,414,269

Total

6,478,182

231,234

353,934

3,001

6,358,482

 

In the 1Q14, the Company expanded its landbank by an additional PSV of R$231.2 million, representing an acquisition cost of R$49.9 million. Of this total, 87.3% was acquired with cash, and 12.7% through swap agreements. In reference to the land acquired in the quarter, about R$ 8.8 million has already been paid in 1Q14, and approximately another R$34.4 million are to be disbursed by the end of the year.

 

First quarter adjustments reflect updates related to project scope, expected launch date and inflationary adjustments to landbank during the period.

 

Gafisa Vendas

During the 1Q14, Gafisa Vendas – an independent sales unit of the Company, with operations in Sao Paulo and Rio de Janeiro, - accounted for 52.8% of gross sales. Gafisa Vendas currently has a team of 485 highly trained, dedicated consultants, combined with an online sales force.

 

 

Gafisa Segment Delivered Projects

During 1Q14, Gafisa delivered 4 projects/phases and 524 units.

 

 

Table 10. Gafisa Segment - Delivered Projects

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

PSV Transferred 1

230,900

295,487

-21.9%

225,729

2.3%

Delivered Projects

4

6

-33.3%

1

300.0%

Delivered Units

524

1,110

-52.8%

86

509.3%

Delivered PSV 2

458,420

480,460

-4.6%

38,995

1075.6%

Note: 1– PSV refers to potential sales value of the units transferred to financial institutions. 2– PSV refers to potential sales value of delivered units.

 

 

 

12


 
 

 

Financial Results

 

Income

Net income for the Gafisa segment in 1Q14 totaled R$326.7 million, down 11% versus the prior year period. The result was impacted by revenues pegged to developments with a less real estate appropriation, in comparison with the previous year.

In the 1Q14, approximately 94.7% of Gafisa Segment revenues were derived from projects in Rio de Janeiro/ São Paulo, while only 5.3% were derived from projects in non-core markets. The table below provides additional details.

­

 

Table 11. Gafisa - Pre-Sales and Recognized Revenues, by Launch Year (R$000)

 

1Q14

1T13

Launches

Pre-sales

% Sales

Revenue

% Revenue

Pre-sales

% Sales

Revenue

% Revenue

2014

37,915

20.2%

-

-

-

-

-

-

2013

51,495

27.5%

25,220

7.7%

11,696

11.6%

-

-

2012

28,773

15.3%

85,423

26.1%

131,985

130.5%

142,409

38.8%

≤ 2011

69,373

37.0%

216,106

66.1%

- 42,565

-42.1%

224,876

61.2%

Total

187,555

100.0%

326,750

100.0%

101,116

100.0%

367,285

100.0%

SP + RJ

162,615

86.7%

309,448

94.7%

117,618

116.3%

365,285

99.,5%

Other Markets

24,940

13.3%

17,302

5.3%

-16,501

-16.3%

2,000

0.5%

 

Gross Profit & Margin

Gross profit for the Gafisa segment in 1Q14 was R$88.9 million, compared to R$87.8 million in 1Q13. Gross margin for the quarter was 27.2%, up 3.3 percentage points over the previous year. Gafisa’s margins have improved, in keeping with the delivery of legacy projects and the narrowing of the segment’s geographic footprint. Excluding financial impacts, the adjusted gross margin reached 35.7%.

 

It is noteworthy that in the last two quarters of 2013, gross margin was positively impacted due to the reversal of provisions in some Gafisa developments, and also due to positive INCC variation.

 

Find below more details about the composition of Gafisa’s gross margin in 1Q14.

Table 12. Gafisa – Gross Margin (R$000) 

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Net Revenue

326,750

489,853

-33.3%

367,285

-11.0%

Gross Profit

88,890

174,429

-49.0%

87,768

1.3%

Gross Margin

27.2%

35.6%

-840 bps

23.9%

330 bps

( - ) Financial costs

(27,640)

(31,231)

-

(22,075)

-

Adjusted Gross Profit

116,530

205,660

-43.4%

109,843

6.1%

Ajusted Gross Margin

35.7%

42.0%

-630 bps

29.9%

580 bps

Table 13. Gafisa – Gross Margin Composition (R$000) 

 

SP + RJ

Other Markets

1Q14

Net Revenue

309,448

17,302

326,750

Adjusted Gross Profit

116,237

292

116,529

Ajusted Gross Margin

37.6%

1.7%

35.7%

 

Selling, General and Administrative Expenses (SG&A)

SG&A expenses totaled R$51.4 million in the 1Q14, a 21% decrease when compared with the R$64.8 million reported in 1Q13. This decrease primarily reflects a lower volume of selling expenses that despite a higher volume of launches, has presented a reduction of R$15.4 million, 44.8% lower than the previous year, result of better balance in marketing expenses and sales commission.

 

 

13


 
 

 

The segment’s general and administrative expenses grew by 6.8% compared to 1Q13, reaching R$32.4 million in 1Q14 due to the non-recurring effect of the payment of R$2.2 million for advisory services due to Alphaville operation. Excluding this effect, the Company’s general and administrative expenses would have reached R$30.2 million, in line with the previous year.

Table 14. Gafisa – SG&A Expenses (R$000) 

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Selling Expenses

18,995

36,927

-48.6%

34,441

-44.8%

General & Administ. Expenses

32,449

46,134

-29.7%

30,373

6.8%

Total SG&A Expenses

51,444

83,061

-38.1%

64,814

-20.6%

Launches

353,934

679,154

-47.9%

83,029

326.3%

Net Pre-Sales

187,555

454,457

-58.7%

101,116

85.5%

Net Revenue

326,750

489,853

-33.3%

367,285

-11.0%

­

 

 

Adjusted EBITDA

Adjusted EBITDA for the Gafisa segment totaled R$54.8 million in the 1Q14, up 14.3%, as compared to R$45.0 million in the previous year. Note that adjusted EBITDA does not consider the impact of Alphaville equity. The adjusted EBITDA margin, using the same criteria, was 16.8%, compared with a margin of 12.2% in the year-ago period.

In the 1Q14, despite a modest decrease in net revenues, the Company's operating performance benefited from the following factors: (i) a 5.8 percentage point expansion in adjusted gross margin compared to the 1Q13; and (ii) a R$13.4 million, or 20.6%, y-o-y reduction in SG&A.

Table 15. Gafisa - Adjusted EBITDA (R$000)

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Net (Loss) Profit

(2,331)

908,827

-100.3%

(11,621)

-79.9%

(+) Financial results

7,824

28,916

-72.9%

52,096

-85.0%

(+) Income taxes

4,022

(14,612)

-127.5%

2,916

37.9%

(+) Depreciation & Amortization

11,206

21,160

-47.0%

6,486

72.8%

(+) Capitalized interests

27,640

31,231

-11.5%

22,075

25.2%

(+) Expenses w/ stock options

3,570

3,652

-2.2%

4,628

-22.9%

(+) Minority shareholders

(548)

(29,100)

-98.1%

6,682

-108.2%

(-) AUSA Effect Result

(3,427)

(824,897)

-

38,292

-108.9%

Adjusted EBITDA

54,810

125,177

-56.2%

44,970

21.9%

Net revenue

326,750

489,853

-33.3%

367,285

-11.0%

Adjusted EBITDA Margi

16.8%

25.6%

-880 bps

12.2%

+460 bps

EBITDA adjusted by expenses associated with stock option plans, as this is an entry, non-cash expense.

*In 4Q13, besides the effect of the AUSA equity, the operation result was discounted, EBITDA reflects equity interests in each period: 30% in 1Q14; 100% in 4Q13 and 80% in the 1Q13.

 

Backlog of Revenues and Results 

The backlog of results to be recognized under the PoC method was R$526.3 million in the 1Q14. The consolidated margin for the quarter was 36.8%, an increase of 150 bps compared to the result posted in 4Q13 and 210 bps over 1Q13. The table below shows the backlog margin:

Table 16. Gafisa - Results to be recognized (REF) by company (R$000)

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Revenues to be recognized

1,429,230

1,550,618

-7.8%

1,951,419

-26.8%

Costs to be recognized (units sold)

-902,957

-1,003,272

-10.0%

-1,273,873

-29.1%

Results to be Recognized

526,273

547,346

-3.8%

677,546

-22.3%

Backlog Margin

36.8%

35.3%

150 bps

34.7%

210 bps

­

 

14


 
 

 

TENDA SEGMENT 

Focuses on affordable residential developments, classified within the Range II of Minha Casa, Minha Vida Program.

 

 

Operating Results

 

Tenda Segment Launches

First-quarter launches totaled R$181.4 million and included 4 projects/phases in 4 states. The brand accounted for 34% of 1Q14 consolidated launches.

 

                                                                  

 

During 1Q14, gross sales reached R$244.9 million, while net pre-sales totaled R$51.8 million. Sales from inventory accounted for 61% of the total, while sales from units launched during 1Q14 accounted for the remaining 39%.

 

All new projects under the Tenda brand are being developed in phases, in which all pre-sales are contingent on the ability to pass mortgages onto financial institutions. During 1Q14, 1,278 units, representing R$147.6 million in net pre-sales, were transferred to financial institutions.

 

Table 17. Tenda – Launches and Pre-sales (R$000)

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Launches

181,445

88,379

105%

113,696

60%

Pre-sales

51,767

163,626

-68%

6,785

663%

 

­

 

15


 
 

 

 

Sales over Supply (SoS)

In 1Q14, sales velocity (sales over supply) rose to 6.4%, compared to 0.9% in 1Q13. Considering the last 12 months, Tenda SoS ended the 1Q14 at 41.6%.

 

 

             

Dissolutions

The volume of 1Q14 dissolutions was down 58.6% versus the 4Q11, when the restructuring process began, and was 16.9% lower on a y-o-y basis.

 

As expected, due to the high volume of deliveries in recent quarters, the level of cancellations in the Tenda segment increased compared to the 4Q13, particularly among older programs and those in the Minha Casa, Minha Vida program. Changes to bank credit criteria over the second half of 2013, which impacted the ability of some customers to secure financing, also impacted the level of cancellations for that period. Approximately 80% of 1Q14 dissolutions in the Tenda segment were related to old projects.

 

 

 

16


 
 

 

 

Table 18. Tenda – Net Pre-sales by Market (R$000)

 

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

New Model

 

 

 

 

 

 

 

 

 

Gross Sales

-

-

-

-

13,656

57,011

59,713

84,491

92,057

Dissolutions

-

-

-

-

-

-2,126

-7,433

-6,293

-31,546

Net Sales

-

-

-

-

13,656

54,885

52,279

78,197

60,511

Legacy Projects

 

 

 

 

 

 

 

 

 

Gross Sales

249,142

344,855

293,801

287,935

225,646

270,677

223,909

154,197

152,875

Dissolutions

-339,585

-329,127

-263,751

-317,589

-232,517

-155,722

-126,038

-68,769

161,619

Net Sales

-90,443

15,728

30,050

-29,653

-6,871

114,956

97,872

85,429

-8,744

Total

 

 

 

 

 

 

 

 

 

Dissolutions

3,157

2,984

2,202

2,509

1,700

1,172

924

491

1,259

Gross Sales

249,142

344,855

293,801

287,935

239,302

327,689

283,622

238,688

244,931

Dissolutions

-339,585

-329,127

-263,751

-317,589

-232,517

-157,848

-133,471

-75,062

-193,164

Net Sales

-90,443

15,728

30,050

-29,653

6,785

169,841

150,151

163,626

51,767

Total (R$)

-90,443

15,728

30,050

-29,653

6,785

169,841

150,151

163,626

51,767

MCMV

-95,759

21,461

7,977

-3,630

36,191

142,602

119,215

122,428

57,157

Out of MCMV

6,316

-5,733

22,074

-26,023

-29,406

29,239

30,936

41,198

-5,390

­

 

 

Tenda remains focused on the completion and delivery of legacy projects, and is dissolving contracts with ineligible clients, so as to sell the units to qualified customers.

Of the 1,223 Tenda units cancelled and returned to inventory, 47% were resold to qualified customers during the same period. In 1Q14, 55% of dissolutions related to the new Tenda model were resold in the same period. It is important to note the importance of the sale and transfer process contained in the New Tenda Business Model, in which within 90 days the customer will either sign the financing agreement with the financial institution, or will have his/her contract cancelled.

 

Tenda Segment Transfers

In the 1Q14, Tenda transferred 1,278 units to financial institutions, representing R$147.6 million.

 

Table 19. Tenda - PSV Transferred - Tenda (R$000)

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

New Projects

53,992

42,921

25,8%

-

-

Legacy Projects

93,604

145,038

-35,5%

274,538

-65.9%

PSV Transferred1

147,596

187,959

-21,5%

274,538

-46.2%

Note: 1– PSV refers to potential sales value of the units transferred to financial institutions.

 

Tenda Segment Delivered Projects

During 1Q14, Tenda delivered 4 projects/phases and 1,272 units.

 

Inventory

Tenda has achieved satisfactory results in its inventory reduction initiatives, with inventory representing 61% of total sales. The market value for Tenda inventory was R$752.3 million at the end of the first quarter, compared to R$618.4 million at the end of 2013. The inventory related to the remaining units for the Tenda segment totaled R$495.0 million or 65.8% of the total. During the period, inventory comprising units within the Minha Casa, Minha Vida program totaled R$491.9 million, or 65.4% of total inventory, while units outside the program totaled R$260.3 million in the 1Q14.

 

 

 

 

17


 
 

 

Table 20. Tenda -  Inventory at Market Value 1Q14 x 4Q13 (R$000) – Tenda Segment  by Region

 

Inventories IP1¹ 3Q13

Launches

Dissolutions

Pre-Sales

Price Adjustments + Other 5

Inventories FP2 4Q13

% Q/Q³

São Paulo

173,138

16,400

-41,210

50,791

-10,068

189,051

9%

Rio de Janeiro

97,116

63,814

-21,128

34,963

-29,645

145,119  

49%

Minas Gerais

52,896

-

-40,397

26,871

12,699

52,069

-2%

Nordeste

56,199

101,231

-20,821

48,348

-55,941

129,016

130%

Outros

239,082

-

-69,608

83,959

-16,386

237,047

-1%

Total Tenda

618,431

181,445

193,164

-244,931

4,193

752,302

21.6%

MCMV

376,525

181,445

-109,040

166,197

-123,134

491,992

30.7%

Out of MCMV

241,906

-

-84,124

78,734

23,793

260,309

7.6%

               

Note: 1) BoP beginning of period – 3Q13. 2) EoP end of period – 4Q13.  3) % Change 4Q13 versus 3Q13. 4) 4Q13 sales speed. 5) projects canceled during the period.

 

 

Table 21. Tenda - Inventory at Market Value – Construction Status (R$000)

 

Not initiated

Up to 30% built

30% to 70% built

More than 70% built

Finished
units ¹

Total 4Q13

 

New Model - MCMV

195,852

36,972

24,388

-

48

257,260

 

Legacy - MCMV

-

-

76,522

28,322

129,888

234,732

 

Legacy – Out of MCMV

-

-

5,546

38,076

216,687

260,309

 

Total Tenda

195,852

36,972

106,457

66,398

346,624

752,302

 

Note: Inventory at market value includes projects with partners. The figure is not comparable to the accounting inventory due to the new accounting consolidation implemented on behalf of CPCs 18, 19 and 36.

 

Tenda Segment Landbank

Tenda segment landbank, with a PSV of approximately R$3.0 billion, is comprised of 24 different projects/phases located exclusively in core markets. 28.1% are located in São Paulo, 15.9% in Rio de Janeiro, 13.3% in Minas Gerais and 42.7% in the Northeast region, specifically in the states of Bahia and Pernambuco. Altogether these amount to more than 17.7 thousand units.

 

Table 22. Landbank - Tenda Segment

 

PSV - R$ mm
(% Tenda)

% Swap
Total

% Swap
Units

% Swap
Financial

Potential Units
(%co)

Potential Units
(100%)

São Paulo

832,139

9.2%

9.2%

-

6,610

6,656

Rio de Janeiro

471,885

20.4%

20.4%

-

3,670

3,723

Northeast

1,263,732

13.7%

13.7%

-

10,462

10,540

Minas Gerais

392,871

66.3%

43.2%

23.1%

3,167

3,280

Total

2,960,627

22.5%

18.4%

4.0%

23,909

24,199

 

Table 23. Tenda – Changes in the Landbank

 

Inicial Landband

Land aquisition

Launches

Adjusts

Final Landbank

São Paulo/Sul

706,344

28,264

16,400

113,931

832,139

Rio de Janeiro

524,684

-

63,814

11,014

471,885

Nordeste

803,293

457,614

101,231

104,056

1,263,732

Minas Gerais

393,283

-

 

- 411

392,871

Total

2,427,604

485,878

181,445

228,590

2,960,627

           

 

In the 1Q14, the Company expanded its landbank with an additional potential PSV of R$485.9 million, representing an acquisition cost of R$32.5 million. Out of this total, 91.9% was acquired for cash, and 8.1% by swap. In reference to the land acquired in the quarter, about R$3.5 million has already been paid in 1Q14, and approximately  R$13.4 million are to be disbursed by the end of 2014.

 

18


 
 

 

 

New Model Update and Turnaround

Tenda began 2014 continuing the resumption of its launches within the New Business Model, based on three basic pillars: operational efficiency, risk management and capital discipline. Currently, the Company continues to operate in 4 macro regions: São Paulo, Rio de Janeiro, Minas Gerais and Nordeste (Bahia and Pernambuco), with a PSV of R$427.6 million to date. Below is a brief description of the performance of these projects:

Table 24. Tenda – New Model: Launched Projects

 

Novo Horizonte

Vila Cantuária

Itaim Paulista

Verde Vida F1

Jaraguá

Viva Mais

Ch. Campo Limpo

Verde Vida F2

Parque Rio Maravilha

Renacença Candeias

Launch

Mar/13

Mar/13

May/13

Jul13

Aug/13

Nov/13

Dec/13

Jan/14

Mar/13

Mar/13

Local

SP

BA

SP

BA

SP

RJ

SP

BA

RJ

PE

Units

580

440

240

340

260

300

300

340

440

432

Total PSV (R$000)

65,145

45,903

31,220

38,563

40,842

39,713

48,000

42,405

63,814

57,024

Sales

577

341

195

261

232

96

127

43

55

52

% Sales

99%

78%

82%

77%

89%

32%

42%

13%

13%

12%

SoS average (month)

8%

6%

7%

9%

11%

6%

10%

4%

12%

12%

Transferred

565

178

162

218

215

55

100

3

-

-

% Transferred

98%

52%

83%

84%

93%

57%

79%

7%

-

-

Work progress

89%

86%

72%

17%

2%

12%

-

-

-

-

­

 

 

Tenda remains focused on the completion and delivery of its remaining projects, and is also dissolving contracts with non-eligible clients, so as to sell the units to qualified customers.

The run-off of legacy projects is on schedule and shall be mostly concluded in 2014, with approximately 95% of the remaining units being delivered by the end of the year

 

Financial Result

 

Revenues

Tenda’s net revenue in 1Q14 totaled R$105.9 million, a reduction of 24% compared with the previous year. The decline reflects the resumption of Tenda launches in the 1Q13 following a period during which launch activity was halted while a new business model was developed. As shown in the table below, revenues from new projects accounted for 55.0% of Tenda’s revenues in 1Q14, while revenues from older projects accounted for the remaining 45.0%.

Table 25. Tenda - Pre-Sales and Recognized Revenues (R$000)

 

1Q14

1Q13

Launches

Pre-Sales

% Sales

Revenues

% Revenues

Pre-Sales

% Sales

Revenues

% Revenues

2014

20,256

39.1%

-

-

-

-

-

-

2013

40,255

77.8%

58,245

55.0%

13,656

201.3%

-

-

2012

-

-

-

-

-

-

-

-

≤ 2011

-8,744

-16.9%

44,215

41.7%

-6,871

-101.3%

140,265

100.0%

Landbank Sale

-

-

3,491

3.3%

-

-

-

-

Total

51,767

100.0%

105,951

100.0%

6,785

100.0%

140,265

100.0%

Legacy

-8,744

-16.9%

47,706

45.0%

-6,871

-101.3%

140,265

100.0%

New Model

60,511

116.9%

58,245

55.0%

13,656

201.3%

-

-

 

Gross Profit & Margin

Gross profit in 1Q14 was R$8.5 million, an increase of 188% compared to a loss of R$9.6 million in 1Q13. Gross margin for the quarter reached 8.0%, an increase of 14.8 percentage points from the prior-year period. The improvement in gross margin reflects the delivery of Tenda legacy projects. At the same time, the contribution of projects developed under Tenda’s new business model, which contain higher margins, is increasing, as observed in recent quarters.

 

19


 
 

 

It is noteworthy that in the last quarters of 2013, Tenda’s gross margin was positively impacted due to the reversal of provisions in some of its developments, and also due to positive INCC variation.

 

Below is the Tenda’s gross margin breakdown for 1Q14. Note that the gross margin of the first projects under Tenda’s new business model benefits from the use of landbank acquired in the past, allowing greater profitability.

Table 26. Tenda – Gross Margin (R$000) 

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Net Revenue

105,951

214,897

-50.7%

140,265

-24.5%

Gross Profit

8,458

45,570

-81.4%

(9,623)

-187.9%

Gross Margin

8.0%

22.1%

-1410bps

-6.9%

1490bps

( - ) Financial costs

(7,105)

(13,644)

-47.9%

(11,519)

-38.3%

Adjusted Gross Profit

15,563

61,214

-74.6%

1,896

720.8%

Adjusted Gross Margin

14.7%

28.5%

-1380bps

1.3%

1340bps

­

 

Selling, General, and Administrative Expenses (SG&A)

During 1Q14, selling, general and administrative expenses totaled R$30.8 million, a decrease of 29.1% compared to R$43.4 million in 1Q13. The decline reflects the Company's efforts to adapt its cost and expense structure to the size of its operations.

Selling expenses totaled R$11.8 million in the 1Q14, a decrease of 43.3% compared to 1Q13, due to the following: (i) consolidation over time of the sales transaction through the store, started with the New Model in early 2013; (ii) adjustments to the Tenda’s sales team compensation and commissioning policy, reflecting the new business model; (iii) smaller representation of the legacy projects impacting Tenda’s cost structure.

Table 27. Tenda – SG&A Expenses (R$000)

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Selling Expenses

11,787

16,930

-30.44%

20,779

-43.3%

General & Administ. Expenses

18,970

30,130

-37.0%

22,632

-16.2%

Total SG&A Expenses

30,757

47,060

-34.6%

43,411

-29.1%

Launches

181,445

88,379

105.3%

113,696

59.6%

Net Pre-Sales

51,767

163,626

-68.4%

6,785

663.0%

Net Revenue

105,951

214,897

-50.7%

140,265

-24.5%

 

 

 

20


 
 

 

 

 

Adjusted EBITDA

Adjusted EBITDA was negative R$24.9 million in 1Q14, compared to negative adjusted EBITDA of R$25.5 million in 1Q13.

Despite the lower level of revenue, the Company was able to improve its operating performance due to the expansion of its gross margin and efforts to streamline its cost and expense structure.

Table 28. Tenda - Consolidated Adjusted EBITDA (R$000)

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Net (Loss) Profit

(37,460)

12,457

-400.7%

(43,852)

-14.6%

(+) Financial results

90

2,274

-96.0%

(2,931) (2.931)

-103.1%

(+) Income taxes

2,575

(3,024)

-185.2%

3,521

-26.9%

(+) Depreciation & Amortization

2,816

3,281

-14.2%

2,923

-3.7%

(+) Capitalized interests

7,105

13,644

-47.9%

11,519

-38.3%

(+) Expenses w/ stock options

19

52

-63.5%

33

-42.4%

(+) Minority shareholders

(58)

190

-130.5%

3,294

-101.8%

(-) AUSA Effect Result

-

(15,113)

-

-

-

Adjusted EBITDA

(24,913)

13,761

-281.0%

(25,493)

-2.3%

Net revenue

105,951

214,897

-50.7%

140,265

-24.5%

Adjusted EBITDA Margin

-23.5%

6.4%

-2990bps

-18.2%

-530bps

­

EBITDA adjusted by expenses associated with stock option plans, as this is an entry, non-cash expense.

 

Backlog of Revenues and Results

The backlog of results to be recognized under the PoC method was R$67.5 million in 1Q14. The consolidated margin for the quarter was 31.8%, an increase of 800 basis points compared to the 1Q13.

 

Table 29. Results to be recognized (REF) (R$000)

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Revenues to be recognized

212,031

244,789

-13.4%

361,914

-4.1%

Costs to be recognized (units sold)

(144,550)

(178,001)

-18.8%

(275,766)

-47.6%

Results to be Recognized

67,482

66,789

-1.0%

86,148

-21.7%

Backlog Margin

31.8%

27.3%

450 bps

23.8%

800 bps

Note: Revenues to be recognized are net of PIS/Cofins (3.65%); excludes the PVA (Present Value Adjustment) method introduced by Law nº 11,638

The amounts include projects still under suspension clause.

 

 

 

21


 
 

 

 

Balance Sheet and Consolidated Financial Results

 

Cash and Cash Equivalents

On March 31, 2014, cash and cash equivalents, and securities, totaled R$1.6 billion.

 

Accounts Receivable

At the end of the 1Q14, total consolidated accounts receivable decreased 23.7% y-o-y to R$3.8 billion, and was 8.1% below the R$4.1 billion recorded in the 4Q13.

Currently, the Gafisa and Tenda segments have approximately R$620.1 million in accounts receivable from finished units.

 

Table 30. Total receivables (R$000)

 

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Receivables from developments (off balance sheet)

1,703,437

1,863.422

-8.6%

2,400,969

-29.1%

Receivables from PoC – ST (on balance sheet)

1,721,676

1,909.877

-9.9%

2,174,750

-20.8%

Receivables from PoC – LT (on balance sheet)

332,120

313,791

5.8%

345,566

-3.9%

Total

3,757,233

4,087,090

-8.1%

4.921.285

-23.7%

­

Notes: ST – Short term | LT- Long term | PoC – Percentage of Completion Method

Receivables from developments: accounts receivable not yet recognized according to PoC and BRGAAP

Receivables from PoC: accounts receivable already recognized according to PoC and BRGAAP

 

 

Cash Generation

Operational cash generation performed well in the first quarter. The Company ended 1Q14 with operating cash flow of R$107.3 million, reflecting: (i) the transfer/receiving process for units sold with financing agents (R$418.6 million was transferred during the period), and; (ii) greater control over the Company’s business cycle. Gafisa had operational cash generation of R$99,1 million, while Tenda reached R$8.2 million.

 

Free cash generation for the period was positive, ending the 1Q14 with R$20.5 million, excluding the following effects: (i) R$55.2 million disbursed in the share buyback program for the period; (ii) R$63.6 million for tax payment from AUSA sale operation, considering any tax credits and; (iii) payment of interest on own capital in the amount of R$130.2 million.

 

Table 32. Cash Generation

 

1Q13

2Q13

3Q13

4Q13

1Q14

Availabilities

1,146,176  

1,101,160

781,606

2,024,163

1,563,226

Change in Availabilities(1)

(102,055)

(45,016)

(319,555)

1,242,557

(460,940)

Total Debt + Investor Obligations

3,602,105

3,620,378

3,639,707

3,183,208

2,967,050

Change in Total Debt + Investor Obligations(2)

(16,740)

18,273

19,329

(456,499)

(216,158)

Other changes (share buyback + AUSA transaction + IOC)(3)

-

35,634

370,998

(1,520,913)

265,284

Cash Generation in the period (1) + (2) + (3)

(85,315)

(27,655)

32,114

178,143

20,502

Cash Generation Final

(85,315)

(112,970)

(80,856)

97,289

20,502

 

Liquidity

At the end of March, 2014, the Company’s Net Debt/Equity ratio reached 44.9%, compared to leverage of 36.1% in the previous quarter and 94.0% in the 1Q13.

 

Excluding project finance, the Net Debt/Equity ratio showed a negative ratio of 18.9%.

 

The Company's consolidated gross debt reached R$2.9 billion at the end of 1Q14, compared to R$3.2 billion at the end of 2013. As previously announced, the Company intends to use part the proceeds of the Alphaville transaction to reduce its gross debt. In the 1Q14, the Company amortized R$435.5 million in debt, of which R$217.4 million in project debt and the remaining R$218.2 million in corporate debt, which equates to around 29% of total maturities by the end of 2014.

 

 

 

22


 
 

 

Table 33. Debt and Investor Obligations

Type of obligation (R$000)

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Debentures - FGTS (A)

985,084

961,416

2.5%

1,189,918

-17.2%

Debentures - Working Capital (B)

473,333

459,802

2.9%

584,890

-19.1%

Project Financing SFH – (C)

1,011,377

1,088,258

-7.1%

790,881

27.9%

Working Capital (D)

474,041

550,052

-13.8%

1,146,952

-58.7%

Total (A)+(B)+(C)+(D) = (E)

2,943,835

3,059,528

-3.8%

3,712,641

-20.7%

Investor Obligations (F)

23,215

123,680

-81.2%

216,375

-89.3%

Total debt (E) + (F) = (G)

2,967,050

3,183,207

-6.8%

3,929,016

-24.5%

Cash and availabilities (H)

1,563,226

2,024,163

-22.8%

1,443,644

8.3%

Net debt (G)-(H) = (I)

1,403,824

1,159,044

21.1%

2,485,372

-43.5%

Equity + Minority Shareholders (J)

3,129,509

3,214,483

-2.6%

2,644,543

18.3%

ND/Equity (I)/(J) = (K)

44.9%

36.1%

880bps

94.0%

-4910bps

ND Exc. Proj Fin / Equity (I)-((A)+(C)/(J) = (L)

-18.9%

-28%

910bps

19%

-3790bps

 

The Company ended the first quarter of 2014 with R$1.2 billion of total debt due in the short term. It should be noted, however, that 56% of this volume relates to debt linked to the Company's projects.

 

Table 34 - Debt Maturity

(R$ mil)

Custo medio (a.a.)

Total

Until Mar/15

Until Mar/16

Until Mar/17

Until Mar/18

After Mar/18

Debentures - FGTS (A)

TR + (9,54% - 10,09%)

985,084

286,306

348,778

150,000

200,000

-

Debentures - Working Capital (B)

CDI + (1,50% - 1,95%)

473,333

315,129

149,615

8,589

-

-

Project Financing SFH – (C)

TR + (8,30% - 11,50%)

1,011,377

367,436

412,023

178,092

53,826

-

Working Capital (D)

CDI + (1,30% - 3,04%)

474,041

193,022

163,955

98,277

18,787

-

Total (A)+(B)+(C)+(D) = (E)

 

2,943,835

1,161,893

1,074,371

434,958

272,613

-

Investor Obligations (F)

CDI + (0,235% - 0,82%) / IGPM+7,25%

23,215

12,421

6,081

3,573

1,140

-

Total debt (E) + (F) = (G)

 

2,967,050

1,174,314

1,080,452

438,531

273,753

-

% Total maturity per period

 

 

40%

36%

15%

9%

-

Volume of maturity of Project finance as % of total debt ((A)+(C))/(G)

 

55.7%

70.4%

74.8%

92.7%

-

Volume of maturity of Corporate debt as % of total debt ((B)+(D)+(F))/(G)

 

44.3%

29.6%

25.2%

7.3%

-

Ratio Corporate Debt / Mortgages

66%/34%

 

 

 

 

 

 

 

 

23


 
 

 

 

Financial Results

 

Revenue

On a consolidated basis, net revenue in the 1Q14 totaled R$432.7 million, down 15% over the previous year.

 

In the 1Q14, the Gafisa segment represented 69.5% of revenues and Tenda accounted for the remaining 30.5%.

 

 

Gross Profit & Margin

Gross profit in 1Q14 was R$97.3 million, an increase of 25% compared to the R$78.1 million reported in 1Q13. Gross margin for the quarter was 22.5%, up 7.1 percentage points over the previous year. The gross margin is improving as Gafisa and Tenda segment legacy projects are replaced by projects launched in core markets and under the new Tenda business model, which contain higher margins. The increased contribution of more profitable projects to consolidated results can be observed throughout 2013 and the first quarter of 2014.

 

Table 35. Gafisa Group – Gross Margin (R$000) 

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Net Revenue

432,701

704,750

38.6%

507,550

-14.7%

Gross Profit

97,348

221,999

-56.1%

78,145

24.6%

Gross Margin

22.5%

31.5%

-28.6%

15.4%

46.1%

( - ) Financial costs

(34.7)

(44.9)

-22.7%

(33.6)

3.3%

Adjusted Gross Profit

132.1

266.9

-50.5%

111.7

18.2%

Ajusted Gross Margin

30.5%

37.9%

-740bps

22.0%

850bps

­

 

 

Selling, General, And Administrative Expenses (SG&A)

SG&A expenses totaled R$82.2 million in the 1Q14, a 24% decrease when compared with the R$108.2 million reported in 1Q13. This decrease primarily reflects a decline in selling expenses in Gafisa and Tenda segments, which reached R$30.8 million in 1Q14, a decrease of 44% compared to 1Q13.

 

 

Table 36. Gafisa Group – SG&A Expenses  (R$000) 

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Selling Expenses

30,782

53,857

-42.8%

55,220

-44.3%

General & Administ. Expenses

51,419

76,264

-32.6%

53,005

-3.0%

Total SG&A Expenses

82,201

130,121

-36.8%

108,225

-24.0%

Launches

535,379

767,534

-30.2%

196,725

172.1%

Net Pre-Sales

239,323

618,083

-61.3%

107,901

121.8%

Net Revenue

432,701

704,750

-38.6%

507,550

-14.7%

 

 

With the turnaround process virtually complete, the Company is seeking greater stabilization in its cost and expense structure and SG&A. In 2014, the Company is looking to improve productivity and increase the efficiency of its operations.

 

 

24


 
 

 

 

Adjusted EBITDA

Adjusted EBITDA totaled R$26.5 million in the 1Q14, considering the Alphaville equity impact. The adjusted EBITDA margin, using the same criteria, was 6.1%, compared with an 11.4% margin reported in the previous year.

 

Table 37. Gafisa Group - Consolidated Adjusted EBITDA (R$000)

 

1Q14

4Q13*

Q/Q (%)

1Q13

Y/Y (%)

Net (Loss) Profit

(39,791)

921,284

-104.3%

(55,473)

-28.3%

(+) Financial results

7,914

31,190

-74.6%

49,165

-83.9%

(+) Income taxes

6,597

(17,636)

-137.4%

6,437

2.5%

(+) Depreciation & Amortization

14,022

24,441

-42.6%

9,409

49.0%

(+) Capitalized interests

34,745

44,875

-22.6%

33,594

3.4%

(+) Expenses w/ stock options

3,589

3,704

-3.1%

4,661

-23.0%

(+) Minority shareholders

(606)

(28,909)

-97.9%

19,396

-103.1%

(-) AUSA Sale Result

-

(840,010)

-

-

-

Adjusted EBITDA1

26,470

138,939

-80.9%

57,769

-54.2%

Net Revenues

432,701

704,750

-38.6%

507,550

-14.7%

Margem EBITDA Ajustada

6.1%

19.7%

-1360bps

11.4%

-530bps


EBITDA adjusted by expenses associated with stock option plans, as this is an entry, non-cash expense.

*In 4Q13, besides the effect of the AUSA equity, the operation result was discounted, EBITDA reflects equity interests in each period: 30% in 1Q14; 100% in 4Q13 and 80% in the 1Q13.

 

Depreciation and Amortization

Depreciation and amortization in the 1Q14 reached R$14.0 million, an increase over the R$9.4 million recorded in the 1Q13, due to higher amortization related to the Company's sales booths.

­

 

Financial Results

The net financial result was negative R$7.9 million in the 1Q14, an improvement compared to the net financial result of negative R$49.2 million in 1Q13. Financial revenues totaled R$44.2 million, a 133% y-o-y increase due to higher cash balances and higher interest rates in the period. Financial expenses reached R$52.1 million, compared to R$68.1 million in 1Q13, impacted by lower debt volume and also by higher interest rates in the period.

 

Taxes

Income taxes, social contribution and deferred taxes for 1Q14 amounted to R$6.5 million.

 

Net Income

Gafisa Group ended the 1Q14 with a net loss of R$39.8 million. Excluding the equity of Alphaville, the Company’s net loss was R$36.4 million in the quarter, compared to a net loss of R$93.8 million recorded in 1Q13.

Consolidated Results

 

1Q14

 

1Q13

Gross Profit

 

97.3

 

78.1

Gross Margin

 

22.5%

 

15.4%

Adjusted Gross Profit

 

132.1

 

111.7

Adjusted Gross Margin

 

30.5%

 

22.0%

Adjusted EBITDA

 

26.5

 

57.8

Net Profit

 

(39.8)

 

(55.5)

( - ) AUSA Equity

 

(3.4)

 

38.3

Net Profit Ex-AUSA

 

(36.4)

 

(93.8)

 

 

 

 

25


 
 

 

 

Backlog of Revenues and Results

The backlog of results to be recognized under the PoC method reached R$593.7 million in the 1Q14. The consolidated margin for the quarter was 36.2%, an increase of 197 bps compared to the result posted in 4Q13. The table below shows the backlog margin by segment:

 

Table 38. Gafisa Group - Results to be recognized (REF)  (R$000)

 

1Q14

4Q13

Q/Q (%)

1Q13

Y/Y (%)

Revenues to be recognized

1,641,262

1,795,408

-8.6%

2,313,333

-29%

Costs to be recognized (units sold)

-1,047,507

-1,181,273

-11.3%

-1,549,639

-32%

Results to be Recognized

593,755

614,135

-3.3%

763,694

-22%

Backlog Margin

36,2%

34.2%

200 bps

33.0%

320 bps

 
 
 

26


 
 

 

 

 

ALPHAVILLE 

 

A Alphaville sells R$ 120 million in the 1st Quarter 2014

 

São Paulo, May 9th, 2014 – Alphaville Urbanismo SA releases its results for the 1st quarter 2014 (1Q14), which are subjected to review by auditors.

 

Launches

The company ended the 1st quarter 2014 with R$ 103 million of launches, 10% below the volume of launches of the same period of last year.

 

 

Sales

In this quarter, the sales volume was R$ 120 million, 9% above the sales volume of the same period of 1Q13.

    

 

 

 

Financial Results

During this quarter, net revenues came at R$ 151 million, 7,2% below the net revenues of 1Q13. The main reason was the non-cash impact of the SELIC change on the NPV of receivables.

Lower revenues and the non-recurring expenses associated to the spin off the back office from Gafisa result in a lower net profit.

 

 

For further information, please contact our Investor Relations team at ri@alphaville.com.br or +55 11 3030-6314.

­

 

27


 
 

 

 

OUTLOOK 

 

First quarter launches totaled R$535.4 million, a 172% increase compared to 1Q13. The result represented 23% of the mid-point of the 2014 guidance range. Gafisa segment accounted for 66% of launches and Tenda represented the remaining 34%.

 

 

Table 39. Guidance - Launches (2014E)

 

Guidance

(2014E)

Actual Figures

1Q14A

1Q14A / Mid-point of Guidance

Consolidated Launches

R$2.1 – R$2.5 bi

535.4 million

23%

Breakdown by Brand

 

 

 

Gafisa Launches

R$1.5 – R$1.7 bi

353.9 million

22%

Tenda Launches

R$600 – R$800 mn

181.4 million

26%

 

With the completion of the sale of the Alphaville stake in 2013, the Company entered 2014 with a solid liquidity position. As reported in this release, the Company`s Net Debt/Equity ratio reached 44.9% at the end of 1Q14. Given this result, and considering the Company's business plan for 2014, the Company expects leverage to remain between 55% - 65%, as measured by the Net Debt/Equity ratio.

 

Table 40. Guidance - Leverage (2014E)

 

Guidance

(2014E)

Actual Figures

1Q14

1Q14 / Mid-point of Guidance

Consolidated Data

55% - 65% Net Debt / Equity

44.9%

-

 

The Company is also providing guidance on its administrative structure. Administrative expenses as a percentage of launch volumes for the Gafisa segment is expected to reach 7.5% in 2014. Tenda has no guidance for this indicator for 2014, although for 2015 the Company expects the ratio to reach 7.0%.

 

Table 41. Guidance - Administrative Expenses / Launches Volume (2014E)

 

Guidance

(2014E)

Actual Figures

1Q14

1Q14 / Mid-point of Guidance

Gafisa

7.5%

9.2%

 

Tenda

Not Applicable

-

 

 

 

Table 42. Guidance Administrative Expenses / Launches Volume (2015E)

 

Guidance

(2015E)

Gafisa

7.5%

Tenda

7.0%

 

 

 

Finally, the Company defined as a benchmark for profitability the Return on Capital Employed (ROCE), and we expect that in the next three year period, this ratio shall be between 14% - 16% for both the Tenda and Gafisa segments.

 

 

Table 43. Guidance – Return on Capital Employed (3 years)

 

Guidance

(3 years)

Gafisa

14% - 16%

Tenda

14% - 16%

 

­

 

28


 
 

 

FINANCIAL STATEMENTS GAFISA SEGMENT 

 

 

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Net Operating Revenue

326,750

489,853

-33.3%

367,285

-11.0%

Operating Costs

(237,860)

(315,424)

-24.6%

(279,517)

-14.9%

Gross profit

88,890

174,429

-49.0%

87,768

1.3%

Operating Expenses

 

 

 

 

 

Selling Expenses

(18,995)

(36,927)

-48.6%

(34,441)

-44.8%

General and Administrative Expenses

(32,449)

(46,134)

-29.7%

(30,373)

6.8%

Other Operating Revenues / Expenses

(15,991)

(33,065)

-51.6%

(3,697)

332.5%

Depreciation and Amortization

(11,206)

(21,160)

-47.0%

(6,486)

72.8%

Equity pickup

(1,282)

(7,216)

-82.2%

(990)

29.5%

Result of investment revaluated by fair value

-

375,853

-100.0%

-

-

Operational Result

8,967

405,780

-97.8%

11,781

-23.9%

 

 

 

 

 

 

Financial Income

31,160

16,488

89.0%

8,229

278.7%

Financial Expenses

(38,984)

(45,404)

-14.1%

(60,325)

-35.4%

 

 

 

 

 

 

Net Income Before Taxes on Income

1,143  

376,864

-99.7%

(40,315)

-102.8%

 

 

 

 

 

 

Deferred Taxes

(292)

22,331

-101.3%

(15)

1846.7%

Income Tax and Social Contribution

(3,730) 

(7,719)

-51.7%

(2,901)

28.6%

 

 

 

 

 

 

Net Income After Taxes on Income

(2,879) 

391,476

-100.7%

(43,231)

-93.3%

 

 

 

 

 

 

Profit from Operations Available for Sale

-  

488,251

-100.0%

38,292

-100.0%

 

 

 

 

 

 

Minority Shareholders

(548)

(29,100)

-98.1%

6,682

-108.2%

(+) Interest on own capital

 

-

 

 

 

Net Result

(2,331)

908,827

-100.3%

(11,621)

-79.9%

 

 

 

 

 

29


 
 

 

FINANCIAL STATEMENTS TENDA SEGMENT 

 

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Net Operating Revenue

105,951

214,897

-50.7%

140,265

-24.5%

Operating Costs

(97,493)

(167,327)

-41.7%

(149,888)

-35.0%

Gross profit

8,458

47,570

-82.2%

(9,623)

-187.9%

Operating Expenses

 

 

 

 

 

Selling Expenses

(11,787)

(16,930)

-30.4%

(20,779)

-43.3%

General and Administrative Expenses

(18,970)

(30,130)

-37.0%

(22,632)

-16.2%

Other Operating Revenues / Expenses

(10,003)

(9,197)

8.8%

(3,121)

220.6%

Depreciation and Amortization

(2,816)

(3,281)

-14.2%

(2,923)

-3.7%

Equity pickup

265

8,752

-97.0%

19,109

-98.6%

Operational Result

(34,853)

(3,216)

983.7%

(39,969)

-12.8%

 

 

 

 

 

 

Financial Income

13,036

11,909

9.5%

10,702

21.8%

Financial Expenses

(13,126)

(14,183)

-7.5%

(7,771)

68.9%

 

 

 

 

 

 

Net Income Before Taxes on Income

(34.943) 

(5,490)

536.5%

(37,038)

-5.7%

 

 

 

 

 

 

Deferred Taxes

759

5,338

-85.8%

(2,459)

-130.9%

Income Tax and Social Contribution

(3.334) 

(2,314)

44.1%

(1,062)

213.9%

 

 

 

 

 

 

Net Income After Taxes on Income

(37,518) 

(2,466)

1421.4%

(40,559)

-7.5%

 

 

 

 

 

 

Profit from Operations Available for Sale

-

15,113

-100.0%

-

-

 

 

 

 

 

 

Minority Shareholders

(58)

190

-130.5%

3,293

-101.8%

 

 

 

 

 

 

Net Result

(37,460)

12,457

-400.7%

(43,852)

-14.6%

­

 

30


 
 

 

 

CONSOLIDATED FINANCIAL STATEMENTS 

 

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Net Operating Revenue

432,701

704,750

-38.6%

507,550

-14.7%

Operating Costs

-335,353

-482,751

-30.5%

-429,405

-21.9%

Gross profit

97,348

221,999

-56.1%

78,145

24.6%

Operating Expenses

 

 

 

 

 

Selling Expenses

(30,782)

(53,857)

-42.8%

-55,220

-44.3%

General and Administrative Expenses

(51,419)

(76,264)

-32.6%

-53,005

-3.0%

Other Operating Revenues / Expenses

(25,994)

(42,262)

-38.5%

-6,817

281.3%

Depreciation and Amortization

(14,022)

(24,441)

-42.6%

-9,409

49.0%

Equity pickup

(1,017)

1,536

-166.2%

18,119

-105.6%

Result of investment revaluated by fair value

-

375,853

-100.0%

-

-

Operational Result

(25,886)

402,564

-106.4%

(28,187)

-8.2%

 

 

 

 

 

 

Financial Income

44,196

28,397

55.6%

18,931

133.5%

Financial Expenses

(52,110)

(59,587)

-12.5%

-68,096

-23.5%

 

 

 

 

 

 

Net Income Before Taxes on Income

(33,800) 

371,374

-109.1%

(77,352)

-56.3%

 

 

 

 

 

 

Deferred Taxes

467

27,669

-98.3%

-2,474

-118.9%

Income Tax and Social Contribution

(7,064) 

(10,033)

-29.6%

-3,963

78.2%

 

 

 

 

 

 

Net Income After Taxes on Income

(40,397) 

389,010

-110.4%

(83,789)

-51.8%

 

 

 

 

 

 

Profit from Operations Available for Sale

503,364

-100.0%

38,292

-100.0%

 

 

 

 

 

 

Minority Shareholders

(606)

(28,910)

-97.9%

9,976

-106.1%

(+) Interest on own capital

 

 

 

 

Net Result

(39,791)

921,284

-104.3%

(55,473)

-28.3%

­

 

31


 
 

 

BALANCE SHEET GAFISA SEGMENT 

 

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Current Assets

 

 

 

 

 

Cash and cash equivalents

968,514

1,381,509

-29.9%

375,900

157.7%

Receivables from clients

1,259,692

1,375,087

-8.4%

1,334,583

-5.6%

Properties for sale

972,509

959,199

1.4%

852,829

14.0%

Other accounts receivable

215,806

207,423

-76.1%

207,058

-76.0%

Deferred selling expenses

-

-

0.0%

-

0.0%

Prepaid expenses

23,206

27,123

-14.4%

44,623

-48.0%

Properties for sale

7,342

7,065

3.9%

15,900

-53.8%

Financial Instruments

-

1,106

-100.0%

4,747

-100.0%

 

 

 

 

 

 

Long-term Assets

 

 

 

 

 

Receivables from clients

309,318

287,484

7.6%

318,170

-2.8%

Properties for sale

515,780

461,160

11.8%

278,756

85.0%

Other

220,577

209,325

-1.8%

210,368

-2.3%

 

1,045,675

957,969

7.6%

807,294

27.7%

Intangible and Property and Equipment

61,332

61,966

68.5%

64,877

60.9%

Investments

2,061,910

2,121,564

-57.8%

2,860,106

-68.7%

 

 

 

 

 

 

Total Assets

6,615,987

7,100,011

-25.2%

6,567,917

-19.1%

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Loans and financing

479,409

470,453

1.9%

386,506

24.0%

Debentures

382,234

354,271

7.9%

208,164

83.6%

Obligations for purchase of land and clients

315,003

338,044

-6.8%

293,004

7.5%

Materials and service suppliers

80,811

62,972

28.3%

75,507

7.0%

Taxes and contributions

52,841

146,962

-64.0%

68,071

-22.4%

Obligation for investors

12,421

112,886

-89.0%

114,814

-89.2%

Other

388,434

520,209

-57.3%

628,990

-64.6%

 

1,711,153

2,005,797

-23.0%

1,775,056

-13.0%

Long-term Liabilities

 

 

 

 

 

Loans and financings

838,017

938,697

-10.7%

956,957

-12.4%

Debentures

656,982

657,386

-0.1%

992,262

-33.8%

Obligations for purchase of land

69,222

71,584

-3.3%

64,058

8.1%

Deferred taxes

45,132

47,022

-4.0%

63,954

-29.4%

Provision for contingencies

67,367

67,480

-0.2%

68,675

-1.9%

Obligation for investors

10,794

10,793

0.0%

19,535

-44.7%

Other

88,747

87,658

-53.5%

102,835

-60.3%

 

1,776,261

1,880,620

-8.1%

2,268,276

-23.8%

Shareholders' Equity

 

 

 

 

 

Shareholders' Equity

3,106,356

3,190,723

-36.1%

2,489,356

-18.1%

Non controlling interests

 

22,216 1,401

22,871

-106.1%

35,229

-104.0%

 

3,128,572

3,213,594

-36.6%

2,524,585

-19.3%

Liabilities and Shareholders' Equity

6,615,987

7,100,011

-25.2%

6,567,917

-19.1%

           

­

 

32


 
 

 

BALANCE SHEET TENDA SEGMENT 

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Current Assets

 

 

 

 

 

Cash and cash equivalents

594,712

642,654

-7.5%

770,129

-22.8%

Receivables from clients

461,984

534,789

-13.6%

840,168

-45.0%

Properties for sale

526,490

482,820

9.0%

723,533

-27.2%

Other accounts receivable

126,842

105,053

20.7%

307,613

-58.8%

Prepaid expenses

7,125

8,064

-11.6%

10,785

-33.9%

Properties for sale

103,675

107,782

-3.8%

125,743

-17.6%

 

1,820,828

1,881,163

-3.2%

2,777,971

-34.5%

Long-term Assets

 

 

 

 

 

Receivables from clients

22,802

26,307

-13.3%

27,396

-16.8%

Properties for sale

137,394

191,235

-28.2%

116,613

17.8%

Other

83,012

79,751

4.1%

77,417

7.2%

 

243,208

297,293

-18.2%

221,426

9.8%

Intangible and Property and Equipment

35,314

37,679

-6.3%

31,865

10.8%

Investments

208,193

225,702

-7.8%

210,600

-1.1%

 

 

 

 

 

 

Total Assets

2,307,543

2,441,836

-5.5%

3,241,862

-28.8%

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Loans and financing

81,049

119,934

-32.4%

133,068

-39.1%

Debentures

219,201

209,561

4.6%

174,459

25.6%

Obligations for purchase of land and clients

45,197

70,330

-35.7%

108,675

-58.4%

Materials and service suppliers

35,591

16,370

57.0%

30,849

-16.7%

Taxes and contributions

59,894

69,662

-14.0%

82,916

-27.8%

Other

340,851

351,135

-0.2%

136,528

156.8%

 

781,583

836,992

-6.6%

666,495

17.3%

Long-term Liabilities

 

 

 

 

 

Loans and financings

86,943

109,227

-20.4%

216,418

-59.8%

Debentures

200,000

200,000

0.0%

399,923

-50.0%

Obligations for purchase of land

13,593

8,391

62.0%

3,386

301.4%

Deferred taxes

8,872

9,631

-7.9%

10,956

-19.0%

Provision for contingencies

57,630

58,328

-1.2%

63,951

-9.9%

Other

66,587

66,686

-0.2%

45,009

47.9%

 

433,625

452,263

-4.1%

739,643

-41.4%

Shareholders' Equity

 

 

 

 

 

Shareholders' Equity

1,067,782

1,127,970

-5.3%

1,797,550

-40.6%

Non controlling interests

 

24,553

24,611

-0.2%

38,174

-35.7%

 

1,092,330

1,152,581

-5.5%

3,241,862

-28.8%

Liabilities and Shareholders' Equity  

2,307,543

2,441,836

-5.3%

1,797,550

-40.6%

­

 

33


 
 

 

 

CONSOLIDATED BALANCE SHEETS 

 

1Q14

4Q13

Q/Q(%)

1Q13

Y/Y(%)

Current Assets

 

 

 

 

 

Cash and cash equivalents

1,563,226

2,024,163

-22.8%

1,443,644

8.3%

Receivables from clients

1,721,676

1,909,877

-9.9%

2,492,119

-30.9%

Properties for sale

1,498,999

1,442,019

4.0%

1,824,553

-17.8%

Other accounts receivable

176,544

153,630

14.9%

205,450

-14.1%

Prepaid expenses

30,331

35,188

-13.8%

55,571

-45.4%

Properties for sale

111,017

114,847

-3.3%

141,644

-21.6%

Financial Instruments

-

183

-100.0%

7,800

-100.0%

 

5,101,793

5,679,907

-10.2%

6,170,781

-17.3%

Long-term Assets

 

 

 

 

 

Receivables from clients

332,120

313,791

5.8%

740,058

-55.1%

Properties for sale

653,174

652,395

0.1%

435,086

50.1%

Other

288,631

274,136

5.3%

294,610

-2.0%

 

1,273,925

1,240,322

2.7%

1,469,754

-13.3%

Intangible and Property and Equipment

139,726

142,725

-2.1%

279,078

-49.9%

Investments

1,102,619

1,120,076

-1.5%

610,761

80.5%

 

 

 

 

 

 

Total Assets

7,618,063

8,183,030

-6.9%

8,530,374

-10.7%

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Loans and financing

560,458

590,386

-5.1%

611,333

-8.3%

Debentures

601,435

563,832

6.7%

382,623

57.2%

Obligations for purchase of land and clients

360,200

408,374

-11.8%

501,918

-28.2%

Materials and service suppliers

138,536

79,342

34.2%

153,896

-30.8%

Taxes and contributions

112,735

216,625

-48.0%

197,124

-42.8%

Obligation for investors

12,421

112,886

-89.0%

184,819

-93.3%

Other

540,850

711,578

-19.5%

567,116

1.0%

 

2,326,635

2,683,023

-13.3%

2,598,829

-10.5%

Long-term Liabilities

 

 

 

 

 

Loans and financings

924,960

1,047,924

-11.7%

1,326,500

-30.3%

Debentures

856,982

857,386

0.0%

1,392,185

-38.4%

Obligations for purchase of land

82,815

79,975

3.6%

67,444

22.8%

Deferred taxes

54,004

56,652

-4.7%

79,405

-32.0%

Provision for contingencies

124,997

125,809

-0.6%

148,371

-15.8%

Obligation for investors

10,794

10,794

0.0%

31,556

-65.8%

Other

107,367

106,984

0.4%

241,541

-55.5%

 

2,161,919

2,285,524

-5.4%

3,287,002

-34.2%

Shareholders' Equity

 

 

 

 

 

Shareholders' Equity

3,106,356

3,190,724

-2.6%

2,489,357

24.8%

Non controlling interests

 

23,153

23,759

-2.6%

155,186

-85.1%

 

3,129,509

3,214,483

-2.6%

2,644,543

18.3%

Liabilities and Shareholders' Equity

7,618,063

8,183,030

-6.9%

8,530,374

-10.7%

 

 

 

 

34


 
 

 

CASH FLOW  

 

1Q14

1Q13

Income Before Taxes on Income

(33,798)

(37,856)

Expenses (income) not affecting working capital

64,453

39,627

Depreciation and amortization

14,022

10,297

Impairment allowance

(2,294)

435

Write-off goodwill Cipesa

-

490

Expense on stock option plan

3,589

4,914

Penalty fee over delayed projects

(612)

(1,363)

Unrealized interest and charges, net

23,956

32,684

Equity pickup

1,017

(21,813)

 

Disposal of fixed asset

1,715

1,570

Warranty provision

(3,478)

2,870

Provision for contingencies

26,149

6,962

Profit sharing provision

4,789

12,547

Allowance (reversal) for doubtful debts

(4,586)

(9,966)

Profit / Loss from financial instruments

186

5,959

Clients

178,657

91,732

Properties for sale

(77,087)

(109,298)

Other receivables

8,236

(8,743)

Deferred selling expenses

4,857

6,114

Obligations on land purchases

(45,335)

(4,721)

Taxes and contributions

(26,272)

(24,246)

Accounts payable

59194

(41,118)

Salaries, payroll charges and bonus provision

(864)

2,463

Other accounts payable

(43,457)

69,769

Current account operations

(58,011)

(11,872)

Paid taxes

(84,682)

(4,192)

Cash used in operating activities

(54,109)

(26,382)

Purchase of property and equipment

(12,738)

(15,353)

Redemption of securities, restricted securities and loans

1,115,783

606,645

Investments in marketable securities, restricted securities

(680,534)

(394,332)

Investments increase

(5,514)

(7,378)

Dividends receivables

2,625

2,000

Cash used in investing activities

419,622

191,582

 

Contributions from venture partners

(100,464)

(112,681)

Increase in loans and financing

175,391

91

304,899

Repayment of loans and financing

(315,039)

(260,029)

Purchase of treasury shares

(22,728)

(4,336)

Interest on equity paid

(117,125)

-

Proceeds from subscription of redeemable equity interest

-

1,482

Operations of mutual

(11,240)

(6,333)

Net cash provided by financing activities

(391,205)

(76,998)

Net increase (decrease) in cash and cash equivalents

(25,692)

88,202

Cash and cash equivalents

-

-

At the beggining of the period

215,194

587,956

At the end of the period

189,502

676,158

Net increase (decrease) in cash and cash equivalents

(25,692)

88,202

     

­

 

­

 

35


 
 

 

GLOSSARY 

 

Affordable Entry Level

Residential units targeted to the mid-low and low income segments with prices below R$200 thousand per unit.

 

Backlog of Revenues

 As a result of the Percentage of Completion Method of recognizing revenues, we recognize revenues and expenses over a multi-year period for each residential unit we sell. Our backlog of results represents revenues minus costs that will be incurred in future periods from past sales.

 

Backlog of Results

As a result of the Percentage of Completion Method of recognizing revenues, we recognize revenues and expenses over a multi-year period for each residential unit we sell.  Our backlog represents revenues that will be incurred in future periods from past sales.

 

Backlog Margin

Equals to “Backlog of Results” divided “Backlog of Revenues” to be recognized in future periods.

 

LandBank

Land that Gafisa holds for future development paid either in cash or through swap agreements. Each decision to acquire land is analyzed by our investment committee and approved by our Board of Directors.

 

LOT (Urbanized Lots)

Land subdivisions, or lots, with prices ranging from R$150 to R$600 per square meter.

 

PoC Method

Under Brazilian GAAP, real estate development revenues, costs and related expenses are recognized using the percentage-of-completion (“PoC”) method of accounting by measuring progress towards completion in terms of actual costs incurred versus total budgeted expenditures for each stage of a development.

 

Pre-Sales

Contracted pre-sales are the aggregate amount of sales resulting from all agreements for the sale of units entered into during a certain period, including new units and units in inventory.  Contracted pre-sales will be recorded as revenue as construction progresses (PoC method). There is no definition of "contracted pre-sales'' under Brazilian GAAP.

 

PSV

Potential Sales Value.

 

SFH Funds

Funds from SFH are originated from the Governance Severance Indemnity Fund for Employees (FGTS) and from savings accounts deposits.  Banks are required to invest 65% of the total savings accounts balance in the housing sector, either to final customers or developers, at lower interest rates than the private market.

 

Swap Agreements

A system in which we grant the land-owner a certain number of units to be built on the land or a percentage of the proceeds from the sale of units in such development in exchange for the land. By acquiring land through this system, we intend to reduce our cash requirements and increase our returns.

 

Operating Cash Flow

Operating cash flow (non-accounting)

  

 

 

­

 

36


 
 

 

 

 

ABOUT GAFISA

  

Gafisa is a leading diversified national homebuilder serving all demographic segments of the Brazilian market. Established almost 60 years ago, we have completed and sold more than 1,100 developments and built more than 12 million square meters of housing under the Gafisa brand - more than any other residential development company in Brazil. Recognized as one of the foremost professionally managed homebuilders, Gafisa is also one of the most respected and best-known brands in the real estate market, recognized for its quality and consistency among potential homebuyers, brokers, lenders, landowners, competitors and investors. Our pre-eminent brands include Tenda, serving the affordable/entry-level housing segment, and we hold a 30% stake in Alphaville, one of the most important companies in the residential lots segment in Brazil. Gafisa S.A. is traded on the Novo Mercado of the BM&FBOVESPA (BOVESPA:GFSA3) and on the New York Stock Exchange (NYSE:GFA).

 

 

 

These are merely projections and, as such, are based exclusively on the expectations of management concerning the future of the business and its continued access to capital to fund the Company’s business plan. Such forward-loing statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors; therefore, they are subject to change without prior notice.

37

 

SIGNATURE

 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 9, 2014
 
Gafisa S.A.
 
By:
/s/ Alceu Duílio Calciolari

 
Name:   Alceu Duílio Calciolari
Title:     Chief Executive Officer